Washington's Electric Car Sales Tax Break Drives Away May 31
Washington drivers who are thinking about buying an electric car would be wise to get down to a dealership in the next two weeks. That's because a valuable tax break disappears at month's end.
The first $32,000 of the purchase price or lease payments on a new electric car are sales tax-free in Washington, but only until May 31. The state Legislature earlier this year decided not to extend that tax break, which was capped at 7,500 vehicle sales.
Bellevue Nissan says it has noticed an uptick in dealership traffic this month as knowledgeable buyers seek to beat the expiration. The dealership is one of the top sellers in the country of the all-electric Leaf model.
Sales manager George Nishimura said the tax break is worth $3,000 to $4,000 depending on the plug-in model chosen. He anticipates electric car sales will slow down for a few months once the incentive is gone, but then come back.
"The market will recover," Nishimura said in an interview Wednesday.
When designing the incentive, the Washington Legislature placed a number of restrictions on the EV tax exemption to limit the cost to the state treasury and additionally to avoid subsidizing luxury buyers.
To qualify for the exemption, the alternative fuel vehicle purchased or leased must have a base-model retail price of less than $42,500 and be delivered to the buyer before June 1. The purchaser pays neither state nor local sales tax.
A bipartisan bill to extend the sales tax exemption died in the final days of the 2018 legislative session because of a dispute about how to backfill the foregone tax revenue.
Boosters of clean cars testified that the incentive was a crucial tool to push electric cars toward wider consumer adoption. The conservative-leaning Washington Policy Center criticized the sales tax break as wasteful and unnecessary.
A regional electric vehicle advocacy group called Forth said in its most recent newsletter that it is convening a coalition that would seek to re-establish the sales tax exemption during the 2019 session.
Meanwhile, Oregon's plug-in vehicle sales incentive remains in limbo. It involves cash rebates up to $2,500 on vehicles with an MSRP under $50,000. But those payouts are on hold while the state awaits a ruling from the Oregon Supreme Court on the legality of the funding mechanism—a new tax on auto sales.
The Oregon Department of Environmental Quality is accepting rebate applications now from people who buy battery-powered cars, but no checks will go out unless the Oregon high court upholds the funding source.
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