Tesla, BMW Culled From Washington State Electric Car Sales Tax Break

Jul 1, 2015

A few minutes past the last minute, the Washington Legislature renewed an expiring tax incentive to promote non-polluting plug-in cars.

That measure was included within a larger highway spending budget that won approval early Wednesday morning.

The sales tax exemption for electric car buyers was capped as part of a four-year extension. That frustrated Republican state representative Chad Magendanz. He explained the tax break is now limited to new plug-in cars that cost less than $35,000.

"Here at the most crowded price point of our new vehicles, we're putting in a cliff,” he said. “And we're picking winners and losers."

Based on today's sticker prices, Nissan Leafs and Kia Soul EVs would sell tax free, while Tesla and BMW electric models would be fully taxed. Magendanz pointed out that BMW's i3 model, with an MSRP from $41,350, is made with carbon fiber sourced from a factory in Central Washington.

But Democrats in the Washington Legislature made clear from the beginning of this year's session they don't want to subsidize luxury car buyers anymore.

The underlying transportation funding measure is on its way to the governor’s desk, where Democratic Governor Jay Inslee has given every indication he will sign it. A spokeswoman for Washington’s Department of Revenue wrote in an email that prospective buyers of a qualifying clean fuel vehicle might want to wait until Inslee signs the bill because the previous tax exemption expired on June 30.

Separately, the transportation package raised the registration renewal fee that plug-in car owners in Washington state must pay from $100 to $150. That annual fee is designed to make electric vehicle drivers contribute something toward highway upkeep in lieu of the gas taxes they do not pay.

Earlier this year the Idaho Legislature established a $140 annual fee for electric vehicle owners for the same reason.

In Oregon, which does not charge a sales tax, electric vehicle enthusiasts and their allies asked the legislature this year to create a $3,000 state rebate for buyers of battery and hydrogen powered vehicles. That measure stalled in the state House Revenue Committee.

"It appears increasingly likely that we will have to regroup and make another attempt to secure passage next session," rebate backer Drive Oregon said in a bulletin the nonprofit sent to its members last week.