Search Federal and State Laws and Incentives

Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Infrastructure and Battery Tax Credit

Public lands used for installing, maintaining, and operating EV chargers are exempt from leasehold excise taxes. Additionally, the state sales and use taxes do not apply to EV and FCEV batteries or fuel cells; labor and services for installing, repairing, altering, or improving EV and FCEV batteries fuel cells, or EV and FCEV infrastructure; the sale of property used for EV and hydrogen fueling infrastructure; and the sale of zero emission buses. (Reference Revised Code of Washington 82.29A.125, 82.08.816, and 82.12.816)

Biodiesel Feedstock Tax Exemption

Waste vegetable oil, specifically cooking oil gathered from restaurants or commercial food processors, used by an individual to produce biodiesel for personal use is exempt from state sales and use taxes. The purchaser must provide the seller with an exemption certificate from the Washington Department of Revenue. (Reference Revised Code of Washington 82.08.0205 and 82.12.0205)

Natural Gas Tax Exemptions

Compressed, liquefied, and renewable natural gas used as a transportation fuel are exempt from public utility taxes. In addition, natural gas distribution businesses are eligible for an exemption for machinery and equipment used to produce natural gas for transportation fuel. This exemption is available quarterly as a remittance. (Reference Revised Code of Washington 82.08.02565 and 82.16.310)

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% cost, 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. 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 $2 million for vehicle credits, and $6 million for infrastructure.

(Reference Revised Code of Washington 82.16.0496 and 82.04.4496)

Fuel Cell Electric Vehicle (FCEV) Tax Exemption

Beginning July 1, 2022, 50% of the retail sales and state use tax does not apply to the sale or lease of the first 650 purchases of new passenger vehicles, light-duty trucks, and medium-duty passenger vehicles powered by fuel cells. The maximum value amount eligible for the tax exemption is the less of $16,000 or the fair market value of the vehicle. Additionally, all used FCEV sales and leases are exempt from the retail and state use tax. The FCEV exemption may not be combined with the Retail Sales and Use tax Exemption.

(Reference Revised Code of Washington 82.08.993 and 82.12.817)