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Intended audience: Buyers and sellers of motor vehicles.
Starting Jan. 1, 2026, an additional tax of 8% applies to the amount of the selling price of a motor vehicle that exceeds $100,000. This tax also applies to the fair market value of a leased vehicle that exceeds $100,000.
How do I calculate the tax?
For purchases of motor vehicles, the taxable amount is the selling price plus trade-in property, minus the current deduction amount of $100,000.
For leases of motor vehicles, the taxable amount is the fair market value of the vehicle at the beginning of the lease minus the current deduction amount of $100,000.
The deduction for the exempt portion of the selling price is increased by 2% on July 1st of each year.
How do I report the tax?
Sellers will report the selling price before trade-in or the fair market value for leased vehicles on their combined excise tax return under the Sales/Lease of Luxury Vehicles classification and then take the Exempt Portion of Selling Price deduction for each vehicle sold.
If the luxury motor vehicle tax was not paid at the time of purchase, the tax applies to the purchase price at the time the vehicle is registered with the Department of Licensing. For questions, please call (360)-902-3770 or visit www.dol.wa.gov.
Exempt vehicles
The luxury motor vehicle tax does not apply to the following:
- Commercial motor vehicles as defined in RCW 46.25.010.
- Motor vehicles with a gross of weight rating greater than 10,000 pounds other than motor homes, as defined in RCW 46.04.305.
- Farm tractors or farm vehicles as defined in RCW 46.04.180 and RCW 46.04.181, unless they are used in the production of cannabis.
- Off-road vehicles as defined in RCW 46.04.365.
- Nonhighway vehicles as defined in RCW 46.09.310.
- Snowmobiles as defined in RCW 46.04.546.
More information
Engrossed Substitute Senate Bill (ESSB) 5801, (Sec. 203); Chapter 417, Laws of 2025.
Questions?
Please call 360-705-6705 or you may request a ruling.
