Propane Laws and Incentives in Washington

The list below contains summaries of all Washington laws and incentives related to propane.

State Incentives

Alternative Fuel Vehicle (AFV) Emissions Inspection Exemption

AFVs powered exclusively by electricity, natural gas, liquefied petroleum gas, and propane are exempt from state emissions control inspections. Plug-in hybrid electric vehicles that obtain a U.S. Environmental Protection Agency fuel economy rating of at least 50 miles per gallon during city driving are also exempt from these inspections.

(Reference Revised Code of Washington 46.16A.060)

Alternative Fuel Vehicle (AFV) Retail Sales and Use Tax Exemption

The sale or lease of new or used passenger vehicles, light-duty trucks, and medium-duty passenger AFVs is exempt from the state retail sales and use tax. Eligible AFVs include those powered by natural gas, propane, hydrogen, or electricity. To be eligible, new vehicles may not be valued above $45,000 and used vehicles may not be valued above $30,000. The tax exemption may apply to all or a portion of the vehicle’s value. The maximum eligible amount for used purchased or leased vehicles is $16,000. The exemption for sales of used and new vehicles expired on July 31, 2025. Leases that qualify for the exemption on or before July 31, 2025, can continue to claim the exemption on lease payments due through July 31, 2028. The maximum exemption amounts for vehicles are as follows:

For more information, see the Renewable Energy/Green Incentives section of Washington State Department of Revenue’s Tax Incentives Programs website.

(Reference Revised Code of Washington 82.08.9999)

Commercial Alternative Fuel Vehicle (AFV) and Fueling Infrastructure Tax Credit

Businesses are eligible to receive tax credits for purchasing new or used medium- and heavy-duty AFVs and medium- and heavy-duty vehicles converted to alternative fuels, and installing alternative fueling infrastructure. Eligible alternative fuels are natural gas, propane, hydrogen, dimethyl ether, and electricity. Tax credits for qualified alternative fueling infrastructure are for up to 50% of the cost to purchase and install the infrastructure. New commercial vehicle tax credit amounts vary based on gross vehicle weight rating (GVWR) and are up to 75% of the incremental cost, with maximum credit values as follows:

Leased AFVs may receive a tax credit for 75% of the incremental cost above the price of a comparable conventionally fueled vehicle, up to $25,000, per vehicle. This exemption also applies to qualified used vehicles modified with a U.S. Environmental Protection Agency-certified aftermarket conversion, if the vehicle is being sold for the first time after modification. Modified vehicles are eligible for credits equal to 50% of the commercial vehicle conversion cost, up to $25,000.

Each entity may claim up to $250,000 or credits for 25 vehicles per year. Applications must be submitted within 30 days of vehicle acquisition or installation completion. All credits earned must be used in that calendar year or the subsequent year. Tax credits are available on a first-come, first-served basis and are subject to annual limits of $6 million ($2 million for each of 3 vehicle classes) for vehicle credits, and $2 million for infrastructure. For more information, see the Renewable Energy/Green Incentives section of Washington State Department of Revenue’s Incentives Programs website.

(Reference Revised Code of Washington 82.16.0496 and 82.04.4496)

Public Transportation Grant Funding

The Washington State Department of Transportation (WSDOT) administers grants for public transportation projects, including alternative fuel vehicle acquisitions and associated charging or fueling infrastructure. Relevant programs may include Green Transportation Capital, Public Transit Rideshare, Regional Mobility, State Buses and Bus Facilities, and Tribal Transit Mobility. For more information, including funding availability and program dates, see the WSDOT Public Transportation Grant Programs and Awards website.

(Reference Revised Code of Washington 46.66.500, 46.66.807, 47.66.030, and 47.66.120)

Zero Emissions Vehicle (ZEV) Sales Tax Exemption for Transit

A sales and use tax exemption is established for zero emission buses purchased by transit agencies or federally recognized tribes for public transportation. The exemptions expire once $14 million in cumulative benefits are reached. For this tax exemption, zero emission bus means a bus that emits no exhaust gas from the onboard source of power, other than water vapor.

(Reference Senate Bill 5801, 2025 and Revised Code of Washington 82.38.030 and 82.38.075)

Laws and Regulations

Alternative Fuel Vehicle (AFV) Technical Assistance and Education Program

The Washington State University (WSU) Energy Program must establish and administer a technical assistance and education program on the use of AFVs for public agencies, including state and local governments. For more information, visit the WSU Energy Program Green Transportation Program website.

(Reference Revised Code of Washington 28B.30.903)

Alternative Fuel Vehicle Labeling Requirement

Every alternative fuel automobile, truck, motorcycle, motor home, or off-road vehicle must bear a reflective placard from the National Fire Protection Association indicating that the vehicle is powered by an alternative fuel. Alternative fuels include propane, liquid petroleum gas, and natural gas.

(Reference Revised Code of Washington 46.37.467)

Natural Gas Vehicle (NGV) and Propane Annual Fee

Owners of NGVs (liquefied natural gas and compressed natural gas) and propane powered vehicles are required to pay an annual license fee, based on gross vehicle weight rating (GVWR), instead of motor fuel excise taxes. The base fee schedule is as follows:

To determine the actual annual license fee imposed per registration year, multiply the appropriate base fee amount from the above schedule by the motor vehicle fuel tax rate in cents per gallon effective on July 1 of the preceding calendar year, and divide the resulting amount by $0.12. There is an additional $5 handling fee for each license issued.

(Reference Revised Code of Washington 82.38.075)

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