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Aug 25

Washington State’s Tax Incentive For Clean Alternative Fuel Vehicles

Posted on August 25, 2017 at 9:26 AM by Andy Tudhope


We often receive questions from members and other soon-to-be car owners along the lines of “What kind of incentives are out there to help me invest in a clean car?” Many are surprised to hear how much they can save, all while acquiring the green car of their dreams.

Earlier this year, Washington State updated its tax incentives for alternative fuel vehicles. Vehicles that are primarily powered by electricity, natural gas, propane autogas or hydrogen are eligible for a state sales tax exemption, in addition to federal tax credits. The vehicle must be bought in Washington State and valued at $35,000 or less. Since Washington’s sales tax rate is upwards of 9.5 percent in some areas, this means that vehicle buyers could comfortably save over $3,000! Add that to thefederal income tax credit (up to $7,500) for battery and plug-in electric vehicles and you could save over $10,000.

In addition to dedicated electric vehicles, the new state tax incentive now includes plug-in hybrid vehicles. Now cars like the Chevrolet Volt – which are powered by electricity, but have a back-up gas tank – are eligible for the sales tax exemption. The law only applies to plug-in hybrids that can travel 30 miles or more solely on battery power.


EVs_StateTaxIncentive (1)
*as of December 2015
**calculated using a 9.5% sales tax rate


Thinking about leasing? If you should choose to lease an alternative fuel vehicle instead of purchasing it outright, you’ll find that the leasing price also accounts for the lack of state sales tax, and often includes the federal tax credit.

For more information, visit the U.S. Department of Energy’s breakdown of Washington’s sales tax exemption.

Commercial alternative fuel vehicles in Washington have their own tax incentive. If you want to know more about how this tax credit could apply to your organization, just ask us!


-Western Washington Clean Cities

Image credits (clockwise): GM, Nissan, Kia and Ford