Come July, a wider range of fully electric and extended range plug-in hybrid cars will benefit from a sales tax break in Washington state. Gov. Jay Inslee signed legislation Monday to raise the cutoff for a tax incentive.
JJ McCoy of the Seattle Electric Vehicle Association says that means the upcoming Tesla Model 3, Chevy Bolt and next generation Nissan Leaf should qualify.
"I really think once those cars are hitting showrooms and are properly incentivized, we're really going to see electric vehicle adoption take off,” McCoy said. “This is a very exciting offering."
Beginning in July, the sales tax exemption applies to the first $32,000 of the selling price of a qualifying new electric car. That nets a tax savings between $2,600 to $3,100 for electric car buyers depending on where the dealer is located in Washington.
The sales tax varies slightly from county to county. The sales tax exemption also applies to monthly payments on newly-executed leases.
McCoy said the Washington Legislature trimmed the value of the EV sales tax break from the current $35,000 maximum exemption to offset the hit to the state treasury from expanding the number of qualifying vehicle models.
The sales tax break is currently limited to alternative fuel vehicles with a sales price up to $35,000. That threshold was intended to exclude luxury models such as Teslas and BMWs. This winter, EV enthusiasts and automakers convinced lawmakers to raise the threshold to include vehicles where the base model has a MSRP up to $42,500.
McCoy said that level captures the "mid-market" including the BMW i3 with a MSRP of $42,400 and the much heralded Tesla Model 3 whose price is expected to start around $35,000.
Governor Inslee also expressed optimism about achieving the intended boost to plug-in car adoption in brief remarks during a bill signing ceremony in Olympia.
"This should result in more vehicle models qualifying for the exemptions than do qualify under current law and help us meet my Results Washington goal of 50,000 electric vehicles on the road by 2020," Inslee said.
Washington's alternative fuel vehicle sales tax exemption is slated to expire midway through 2019. It could expire sooner if sales of electric vehicles accelerate. Legislators decided the tax break should end the month after 7,500 qualifying vehicles are sold in Washington state. The state Department of Licensing was directed to start a tally beginning with EV registrations since July 15, 2015.