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How Ridesharing is Enshrined in Washington Sales Tax

  • Jan 7, 2016 | Jessica Sillers

Busy commuters aren’t the only people who love ride-sharing services. Washington legislators know that carpooling does a lot to make rush-hour traffic more bearable. To encourage more of it, Washington sales tax law provides an exemption for ride-sharing vehicles.

Offering this tax exemption helps the state in multiple ways. Washington legislators hope to help keep traffic in check and make it easier to comply with the Clean Air act.

Incentivizing ride-sharing is a good thing for people with disabilities, too. A variety of ride-sharing options means more ways to get to work for people with limited vision, mobility, or other difficulties that make driving their own car problematic.

The Fine Print

The exemption states that sales tax doesn’t apply to the sales of motor vehicles with five or six passengers (driver included) that are meant to be used primarily for ride-sharing. Vehicles need to be used for ride-sharing for the 36 months following the purchase date to qualify. Buying a new car and promising to pick your coworkers up from time to time won’t earn you a sales tax break.

Where you’re driving is another critical factor that dictates whether you qualify. The exemption only applies to areas that have a "commute trip reduction plan" in place. Washington’s eight largest counties are required to do so. Other counties, or even individual cities or towns, may also choose to establish one.

Qualifying vehicles also need to belong to a public transportation agency or be part of an employer’s commute trip reduction program for employees. In other words, while Uber and Lyft have helped make carpooling cool again, most of their vehicles likely won’t qualify for a Washington sales tax exemption.

Save $ and Get Special Plates

You can spot tax-exempt ride-sharing vehicles on the road by their special license plates.

If you’ve got the right area and ride-sharing program, WA sales tax law invites you to hit the road with your officemates and a sales tax-free set of wheels.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jessica Sillers
Avalara Author Jessica Sillers