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Aug 25

Take 2: Washington State’s Tax Incentives For Alternative Fuel Vehicles

Posted on August 25, 2017 at 9:52 AM by Andy Tudhope


Washington’s statewide EV sales by county (December 2015).

Looking to purchase an EV in the near future? Do you know about Washington’s state tax incentives that can save you $$thousands$$?

Right now, anyone purchasing an eligible new alternative fuel vehicle in Washington can skip the sales tax – potentially knocking several thousand dollars off the price. Combined with the federal tax credit of up to $7,500, this can result in some sizable savings!

The state legislature recently approved some adjustments to the sales tax incentive, which go into effect this July. Here’s what you need to know:


From now until July 1, 2016:

  • Eligible vehicles with a final sale price under $35,000 qualify for the sales tax exemption.
  • Leased cars can now also qualify:

o   For leases signed before July 1, 2015, lease payments are exempt, regardless of the vehicle’s fair market price at the inception of the lease.

o   For leases signed between July 15, 2015, and July 1, 2016, lease payments are exempt if the fair market value of the car was less than $35,000 at the signing of the lease.

Starting on July 1, 2016:

  • Whether you’re buying or leasing, vehicles with a base model purchase price of less than $42,500 are eligible for the sales tax incentive.
  • The sales tax exemption is applicable for up to $32,000 of a vehicle’s final sale price.

This tax incentive expires July 1, 2019, or after Washington sells 7,500 vehicles that qualify for the exemption – whichever comes first.


Eligible vehicles: Passenger cars, light-duty trucks, and medium-duty passenger vehicles are eligible for the sales tax exemptions if they meet the following criteria:

  • Are exclusively powered by a clean alternative fuel, or
  • Are capable of traveling at least 30 miles using only battery power. This requirement covers dedicated electric cars, and plug-in hybrid electric vehicles with an all-electric range of 30 miles or more.


For more information about Washington’s sales tax incentive:

Stay up-to-date with all of the alternative fuel-related legislation passed by Washington State by checking out the Alternative Fuel Data Center. Have any questions about these bills, or what else may be coming down the pipeline in the future? Contact us, we’re always happy to help!

- Western Washington Clean Cities