Washington State EV Tax Credit Explained

We’ve been rounding up as many state EV tax incentives as we can, and the number of states that are offering some kind of incentive for EV buyers keeps growing. However, in this week’s blog post, we’ll be looking at current incentives being offered by one of the earliest adopters of state incentives for green vehicles: The (aptly-named) Evergreen State.

The State of Washington has been emphasizing green tech and vehicles for longer than most and has offered incentives in the past to back up their priorities. The effort has paid off, too: according to the Seattle Times, almost 18% of new vehicle sales in Washington were either hybrid or fully electric for Q1 and Q2 of 2023.

Like the Federal Clean Vehicle Credit, the current Washington State Sales Tax exemption helps buyers of non-luxury EVs afford the switch to cleaner technology.

Let’s walk through some of the Washington state sales tax exemption terms and requirements, electric vehicle eligibility, and the best place to save on your next EV.

Before we get started: this article is for informational purposes only and should not be considered tax, legal, financial, or accounting advice. Consult with your own financial or legal advisors before making transactional decisions.

What is the Washington Sales Tax Exemption?

The program currently affects buyers of EVs that purchased (or are planning to purchase) an EV (or other alternative fuel vehicle) between August 1st, 2019, and August 1, 2025.

Rather than deduct a portion of your income tax or mail you a rebate check, the state of Washington has decided not to collect a portion of the sales tax on EV sales that meet certain price standards.

The best news about this EV incentive? You can get a sales tax exemption on a new OR used EV, in a dealership OR a private sale.

The EV Sales Tax Exemption can be used in addition to the Federal Clean Vehicle Tax Credit, though the selling price restriction for Washington’s deduction is lower for new vehicles and higher if the EV is used.

The Washington EV sales tax exemption applies to:

• New EVs (or alternative fuel vehicles) with a selling price of up to $45,000
• Used EVs (or alternative fuel vehicles) with a selling price of up to $30,000

Again, this incentive only allows you to exempt a portion of the sales (or use) tax from your purchase:

For example, if a used EV sells for $24,000 (dealership fees and delivery included), the sales tax on the first $16,000 of the sale is exempted, leaving you to pay sales tax on the remaining $8,000 of the sale.

Who Qualifies for the Washington State EV Tax Credit?

The Washington EV tax credit (or rather, the tax exemption) applies to anyone who would pay sales or use tax on an EV purchase in Washington State. While we haven’t seen this explicitly stated, we assume that this means both individuals and businesses can qualify, and there is no limit to the number of qualifying purchases until July 31, 2025.

Which EVs Qualify for Washington’s Sales Tax Exemption?

Currently, there are two ways a clean vehicle can qualify for the sales tax exemption: by type of vehicle or by selling price. Let’s start with type:

EVs That Qualify for the Washington State EV Sales Tax Exemption

The current exemption applies to passenger cars, light duty trucks, and medium duty passenger vehicles.

Motorcycles are NOT included even though they may be able to meet other qualification criteria.

Any Battery Electric Vehicle (BEV) or clean alternative fuel vehicle (that runs exclusively on that fuel) is eligible. This means that most Teslas, Ford EVs, Rivians, and so on will qualify if their sales price is under the limit. We’ll review those limits in the next section.

For a Plug-In Hybrid Electric Vehicle (PHEV) to be eligible, it must be able to travel 30 miles on battery power alone (for example, the 2019 Chevy Volt PHEV can run on the electric battery for 53 miles before switching over to the gas engine).

For a thorough look at potentially eligible vehicles, be sure to check out Washington’s searchable list of EVs, PHEVs, Hybrids, and alternative fuel vehicles that may qualify for the credit. There are over 700 different model year and trim combinations in that list; too many to mention here!

Selling Price Limits for the EV Tax Exemption in Washington

Again, the Washington EV sales tax exemption applies to:

• New EVs (or alternative fuel vehicles) with a selling price of up to $45,000
• Used EVs (or alternative fuel vehicles) with a selling price of up to $30,000

The exemption applies to either a full purchase or lease, provided that the fair market price of the vehicle includes delivery charges and any other service charges that are necessary to complete the sale. These necessary sales charges would include dealership fees, but wouldn’t necessarily include extras such as the price of an extended warranty (unless this is a part of the dealership’s required sales package).

It’s worth noting that trade-in amounts don’t affect the EV’s ability to qualify. If the EV is over the price threshold, a trade-in amount won’t bring the fair market price of the EV down. This is also true for the Federal Clean Vehicle Credit or the Federal Used Clean Vehicle Credit: even if they are given in the form of a rebate at the dealership, these incentives don’t get factored into the fair market value of the electric vehicle.

How Can I Get the Washington State EV Tax Exemption?

You can either get the Washington EV sales tax exemption at the dealership or from filing the appropriate paperwork with a Washington State licensing office. Here’s how:

Washington State Sales Tax Exemption for an In-State Dealership Sale

If you purchase a new or used EV from a dealership located in the state of Washington, the dealer should have sole responsibility for determining how much tax exemption you qualify for. They will process your purchase with the exempted tax deducted from your total.

If for any reason the dealership does not (or did not) deduct the amount automatically, you can apply for a refund directly.

To apply for a refund of sales or use tax that you may have paid in error on an EV that should qualify for the exemption, you can use the appropriate forms and submission information on Washington State’s Department of Revenue website (check under Renewable Energy/Green Incentives).

Sales Tax Exemption in Washington State for a Private Sale

Sales (or Use) Tax will need to be paid on private sales, but the buyer is responsible for paying the tax when licensing that vehicle with the state as a new owner.

You’ll need to bring your sales paperwork to a vehicle licensing office to get the exemption (and to get your vehicle properly licensed). This information will most likely include:

• Title (properly signed and released)
• Bill of Sale
• Odometer statement (signed by both seller and buyer)
• Washington Driver’s License / Washington ID Card

We’d advise you to call the office ahead of time to make sure you’ve got all the paperwork they will require to process your sales tax exemption.

Sales Tax Exemption in Washington State for an Out-Of-State Dealership

To get the Washington State sales/use tax exemption for an EV purchased from an out-of-state dealer, you’ll bring your dealership sales paperwork to a vehicle leasing office located inside Washington state. They should be able to help you get the correct amount of tax money exempted when you register your vehicle.

Save on a Used EV in Washington with the EV Sales Tax Exemption

We’re really happy to see that Washington State recognizes both new and used EVs as worthy of a tax break, and even happier to note that they allow this for both dealership and private sales. We have both seller types listed on Find My Electric, so why not start your journey here?

Sort and filter through thousands of EV listings with no gas-powered vehicles cluttering up your results. We see everything from used Tesla Model 3s to Polestar 2s listed here at great prices—with more added every day!

Discover your next ride and join the clean vehicle movement with Find My Electric. See what’s available today!