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Starting October 1: Some business services are now subject to retail sales tax, as required by state law, ESSB 5814. When you buy these services, vendors should add sales tax to your bill. If you sell these services, you should begin collecting retail sales tax. Learn more about Services newly subject to retail sales tax.
Luxury motor vehicle tax
What is the luxury motor vehicle tax?
It is an 8% tax on the amount of the selling price or the fair market value of a motor vehicle that exceeds $100,000. This tax is in addition to retail sales tax and motor vehicle sales/use tax.
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.
For leases of motor vehicles, the taxable amount is the fair market value of the vehicle at the inception of the lease minus the current deduction amount.
The deduction amount is increased by 2% on July 1st of each year.
What is the deduction amount?
The deduction amount for Jan. 1, 2026, through Jun. 30, 2026, is $100,000 per vehicle.
This amount 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 is not paid at the time of purchase, the tax applies at the time the vehicle is registered with the Department of Licensing. For questions, please contact the Department of Licensing at 360-902-3770 or visit www.dol.wa.gov.
Are there any exemptions?
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.
What are the funds used for?
The funds are deposited into the multimodal transportation account to fund transportation improvements.
