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Many businesses may qualify for tax incentives offered by Washington. These incentives include deferrals, reduced B&O rates, exemptions, and credits.
If your business claimed or plans to claim a tax incentive, you may be required to file an Annual Tax Performance Report. You must file the report by May 31 following each year you are eligible for the incentive. If May 31 falls on a weekend or state holiday, your due date is the next business day. If you do not file reports on time, 35% or 50% of the incentive you claimed becomes immediately due and payable.
The Annual Tax Performance Report is available to file in my My DOR starting April 1. If you cannot find the report online or have questions about an extension, contact Taxpayer Account Administration at 360-705-6210.
Check each tax incentive below for information on your reporting requirements.
See if your business is in a CEZ. Enter the address in our Tax Rate Lookup Tool.
Performing research, design and engineering activities to develop an aerospace product or aerospace product line. Activities must be performed in Washington to qualify for this credit.
Expires July 1, 2040.
For questions about the credit, call Taxpayer Account Administration at 360-705-6216.
For manufacturers and processors for hire:
For certified FAR repair stations and aerospace non-manufacturers:
Expires July 1, 2040.
For questions about the credit, call the Taxpayer Account Administration Division within DOR at 360-705-6216.
Effective April 1, 2020, Engrossed Senate Bill 6690 repealed the aerospace preferential rates in RCW 82.04.260(11). Businesses no longer report under the following line codes:
B&O tax rates for manufacturers of commercial airplanes and manufacturers of components for commercial airplanes increased effective April 1, 2020. If you manufacture commercial airplanes or components for commercial airplanes you should report under the following line codes:
B&O tax rates for manufacturers of tooling increased effective April 1, 2020. If you manufacture tooling specifically designed for use in manufacturing commercial airplanes or components of commercial airplanes, you should report as follows:
Please see our Special Notice: Increased B&O tax rates for certain aerospace tax classifications and ESB 6690 for more information.
If you are performing aerospace product development for others you should report under the B&O tax classification Non-manufacturing Aerospace Product Development at a preferential rate of 0.9%.
Note: This is an apportionable activity.
The preferential rate expires June 30, 2040.
If you are a certified FAR part 145 repair station you should report under the B&O tax classification Federal Aviation Administration (FAR) Repair Station at a preferential rate of .2904% for retail sales that are exempt from sales tax under RCW 82.08.0261, RCW 82.08.0262, or RCW 82.08.0263.
Note: For all other sales you should report under the standard Wholesaling or Retailing B&O tax classifications and rates.
The preferential rate expires June 30, 2040.
The following reporting/documentation requirements apply to the preferential B&O tax rates and other aerospace incentives.
For questions about the reporting of aerospace, call the Taxpayer Account Administration Division within DOR at 360-705-6216.
Increased B&O Tax Rates for Certain Aerospace Tax Classifications (pdf)
Aerospace Manufacturers Tax Incentives (pdf)
Tax Incentives for Federal Aviation Regulation Part 145 Repair Stations (pdf)
Non-manufacturer Aerospace Incentives (pdf)
Aerospace Tooling Manufacturers Tax Incentives (pdf)
New and Extended Aerospace Tax Preferences (pdf)
82.04.250 (3)
82.04.260(11)
82.04.290(3)
82.32.534
82.32.550
82.32.600
Construction of new buildings to be used for airplane repair and maintenance including:
The exemption is in the form of a refund. Applicants must pay the state and local sales taxes at the time of purchase and then apply for a refund. Businesses may only submit one application per calendar quarter.
Expires January 1, 2031.
For questions about the exemption, call Taxpayer Account Administration at 360-705-6216.
Constructing new buildings and/or new additions to buildings primarily used to manufacture commercial airplanes, commercial airplane fuselages and commercial airplane wings as defined in RCW 82.32.550 and RCW 82.32.850.
Expires July 1, 2040.
For questions about the exemption, call Taxpayer Account Administration at 360-705-6216.
New and Extended Aerospace Tax Preferences
82.08.980
82.12.980
82.32.534
82.32.550
82.32.600
82.32.850
82.32.808
ETA 3217.2020 – Tax Exemption for Constructing New Buildings for Aerospace Manufacturing
Purchases of computer hardware, software, and peripherals, and charges for labor and services related to the installation of such equipment. The hardware, software, and peripherals must be primarily used in the development, design, and engineering of aerospace products or in providing aerospace services.
Expires July 1, 2040.
For questions about the exemption, call Taxpayer Account Administration at 360-705-6216.
An aluminum smelter who manufactures aluminum in this state.
B&O tax credit for property tax paid by an aluminum smelter.
For questions about the credit, call Taxpayer Account Administration at 360-705-6214.
A person who sells electricity, natural gas or manufactured gas to an aluminum smelter in Washington State.
To qualify for the credit a person must sell electricity, natural gas, or manufactured gas to an aluminum smelter. The credit is equal to the gross amount of sales to the aluminum smelter multiplied by the corresponding rate of Business & Occupation (B&O) Tax and/or Public Utility Tax (PUT) but only when it’s specified in a contract that the price of the electricity or gas sold to the smelter will be reduced by an amount equal to the credit.
For questions about the credit, call Taxpayer Account Administration at 360-705-6214.
Aluminum smelters who manufacture aluminum in this state.
Use tax exemption for the use of natural or manufactured gas by an aluminum smelter.
For questions about the exemption, call Taxpayer Account Administration at 360-705-6216.
Aluminum smelters and processors for hire who manufacture aluminum in this state.
Manufacturing aluminum and selling the same at wholesale by aluminum smelters and processors for hire.
For questions about the program, call Taxpayer Account Administration at 360-705-6214.
Aluminum smelters and processors for hire who manufacture aluminum in this state.
Retail sales tax credit for personal property used at an aluminum smelter, tangible personal property that will be incorporated as an ingredient or component of buildings or other structures at an aluminum smelter, or for labor and services rendered with respect to such buildings, structures, or personal property.
For questions about the credit, call Taxpayer Account Administration at 360-705-6214.
Manufacturers of alcohol fuel, biodiesel fuel, biodiesel feedstock, or wood biomass fuel.
Manufacturing alcohol fuel, biodiesel fuel, biodiesel feedstock, or wood biomass fuel.
For questions about the exemption, contact your local county assessor's office.
Manufacturers of wood biomass fuel.
Manufacturing wood biomass fuel.
Expires January 1, 2029.
For questions about the program, call 360-705-6705.
Any person that is not engaged in selling biodiesel fuel at wholesale or retail.
Purchase of waste vegetable oil to produce biodiesel fuel for personal use. Waste vegetable oil is used cooking oil gathered from restaurants or commercial food processors.
For questions about the sales and use tax exemption, call 360-705-6705.
Available to the owner and tenants of an eligible data center that has a combined square footage of at least 100,000 square feet and is located in a rural county.
Construct, renovate, or expand a data center under a building permit issued during one of the following periods:
Or, refurbish an existing facility.
Refurbishment means a substantial improvement to an eligible computer data center. Certificates for refurbishment are limited to six each calendar year. Each qualifying business may only apply for one refurbishment certificate per data center per calendar year.
Sales/use tax exemption on:
Within six years of the issuance of an exemption certificate, the owner or tenant must show net employment increased by a minimum of the lesser of:
For tenants, the increase of family wage jobs is based only on the space occupied by the tenant.
Within three years after being placed in service, a qualifying business operating a newly constructed data center must certify to the department that it has obtained certification under one or more specified sustainable design or green building standards.
All documents must be submitted electronically.
Expires July 1, 2048.
For questions about the application, call Taxpayer Account Administration at 360-705-6217.
Available to the owner and tenants of an eligible data center that has a combined square footage of at least 100,000 square feet and is located in King, Pierce, or Snohomish County.
To qualify, the data center must have a building permit to construct, renovate, or expand the data center issued after June 9, 2022, or refurbish an existing facility.
Refurbish means a substantial improvement to an eligible computer data center.
Sales/use tax exemption on:
The department is limited in the number of certificates it can issue as follows:
| Calendar Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 |
|---|---|---|---|---|---|---|
| Number of certificates | 6 | 0 | 6 | 6 | 6 | 6 |
Within six years of the issuance of an exemption certificate the owner or tenant must show net employment increased by a minimum of three family wage employment positions for each 20,000 square feet or less of newly dedicated server space at the eligible computer data center.
For tenants, the increase of family wage jobs is based only on the space occupied by the tenant.
Within three years after being placed in service, a qualifying business operating a newly constructed data center must certify to the department that it has obtained certification under one or more specified sustainable design or green building standards.
Submit the appropriate Application for Sales Tax Exemption for Purchases by Data Centers before purchasing server equipment or power infrastructure.
All documents must be submitted electronically.
Expires July 1, 2038.
For questions about the application, call Taxpayer Account Administration at 360-705-6217.
Employers and property managers.
Employers and property managers who provide commute trip reduction incentives to or on behalf of their own or other employees.
Program expires July 1, 2024. No credits may be applied to returns filed after June 30, 2024, even if they relate to prior tax periods.
For questions about the application, call Taxpayer Account Administration at 360-705-6214.
Businesses hiring unemployed veterans located in Washington.
Employ a qualified employee for a full-time position located in Washington for at least two consecutive full calendar quarters on or after Oct. 1, 2016 and before June 30, 2022.
For questions about the credit, call Taxpayer Account Administration at 360-705-6214.
Persons providing international services, such as computer; data processing; information; legal; accounting and tax preparation; engineering; architectural; business consulting; business management; public relations and advertising; surveying; geological consulting; real estate appraisal; or financial services in designated geographical areas.
Creating permanent full-time positions in international services located in a Community Empowerment Zone (CEZ) or designated International Services District. International services must be provided to persons domiciled outside the United States or be for use primarily outside this country.
$3,000 per year for each qualified employment position created. Additionally, $3,000 in credit can be taken in each of the following four years if the position is maintained.
For questions about the credit, call Taxpayer Account Administration at 360-705-6214.
All Washington employers.
Payments to the Employment Training Finance Account through the Customized Employment Training Program for customized employee training.
Credit equals 50% of payment to Employment Training Finance Account.
Program expires July 1, 2026.
No credits may be applied to returns filed after June 30, 2026, even if they relate to prior tax periods.
For questions about the credit, call Taxpayer Account Administration at 360-705-6214.
For questions about the program, visit the State Board for Community & Technical Colleges.
For questions about the program, call 360-705-6705.
Farmers and businesses establishing or operating anaerobic digesters.
Note: Beginning July 1, 2018, anaerobic digesters no longer have to be used primarily (more than 50%) to treat livestock manure.
Purchases of tangible personal property that becomes an ingredient or component of the anaerobic digester and charges for installing, repairing, constructing, cleaning, altering or improving the anaerobic digester.
For questions about the program, call Kurt Sand at 360-705-6659.
Qualified farmers.
Purchase or use of certain equipment. The exemption is also available for materials, labor, and services for the construction of hay sheds.
For questions about the exemption, call Kurt Sand at (360) 705-6659.
Farmers producing agricultural products and persons providing horticultural services to farmers.
Purchases of diesel fuel, biodiesel fuel, or aircraft fuel.
For questions about the program, call Kurt Sand at (360) 705-6659.
Licensed dairies with certified dairy nutrient management plans and qualifying animal feeding operations.
Purchases that become an ingredient or component of existing livestock nutrient management equipment and facilities or services provided for operating, repairing, cleaning, altering, or improving this equipment and facilities.
Suspended July 1, 2010, through June 31, 2013.
For questions about the exemption, call Kurt Sand at (360) 705-6659.
Eligible farmers.
Eligible farmers who purchase replacement parts for qualifying farm machinery and equipment.
As of June 14, 2014, eligible farmers will use the Farmers’ Certificate for Wholesale Purchases and Sales Tax Exemptions to obtain this exemption.
For questions about the exemption, call Kurt Sand at (360) 705-6659.
Dairy product manufacturers.
For questions about the program, call Taxpayer Account Administration at 360-705-6210.
Seafood product manufacturers.
Expires July 1, 2035.
For questions about the program, call Taxpayer Account Administration at 360-705-6210.
Manufacturers of fresh fruit and vegetables.
Expires July 1, 2035.
For questions about the program, call Taxpayer Account Administration at 360 705-6210.
Dairy, seafood or fresh fruit processors or cold storage warehouses owned or operated by a wholesaler or third-party warehouser to store qualifying products.
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Manufacturers constructing eligible investment projects. Applications will be accepted beginning January 1, 2018. The application must be submitted before initiation of construction or acquisition of equipment. Only two new manufacturing facilities per calendar year can be approved, one of which much be located in eastern Washington and one of which must be located in western Washington.
Note: This is a deferral, not an exemption or waiver. The recipient must begin paying the deferred taxes in the fifth year after the date on which the investment project has been operationally completed.
Construction of an eligible investment project by a manufacturer.
"Eligible investment project" means an investment project for qualified buildings and machinery and equipment on two new, renovated, or expanded manufacturing operations per year, at least one of which must be located east of the crest of the Cascade mountains, and one of which must be located west of the crest of the Cascade mountains. The deferral provided in this section only applies to the state and local sales and use taxes due on the first ten million dollars in costs for qualified buildings and machinery and equipment.
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Manufacturers and processors for hire performing manufacturing and R&D. Testing operation for a manufacturer and processor for hire.
Purchase of qualifying machinery and equipment used directly in a manufacturing operation or research and development performed by a manufacturer, or testing operations performed for a manufacturer.
For questions about the exemption, call 360-705-6705.
Available to:
Manufacturers and research and developers located in counties with a population of less than 650,000 at the time of application. Applications will be accepted starting July 1, 2022. The application must be submitted before initiation of construction or purchase of equipment.
Note: This is a deferral, not an exemption. However, you do not have to repay deferred taxes unless you do not meet the conditions of the deferral program.
Qualifying activity:
Construction of qualified building and/or qualified machinery and equipment by a manufacturer and/or research and developer. The amount of sales/use tax that can be deferred is limited to $400,000 per person.
Program requirements:
The application must be submitted before initiation of construction or purchase of machinery and equipment.
The recipient of a deferral certificate must begin meaningful construction on an eligible investment project within two years of receiving the certificate. If the recipient does not begin meaningful construction within two years of receiving the deferral certificate, the certificate is invalid and taxes are due immediately.
Repayment of deferred taxes:
You do not have to repay the deferred taxes unless one of the following occurs:
A portion of the tax is due if the Annual Tax Performance report is not submitted timely.
Reporting/documentation:
Applications will not be accepted after June 30, 2032.
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Biotechnology and medical device manufacturers.
This program expired January 1, 2017. We will not accept applications.
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Limited to businesses conducting R&D and pilot scale manufacturing in the fields of:
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Manufacturers or businesses that conditions vegetable seeds, research and development and commercial testing for manufacturers in an eligible county or in a Community Empowerment Zone (CEZ).
This program expired July 1, 2020. We will not accept applications.
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Public or entertainment arenas, effective October 1, 2023.
Reporting/documentation:
Expires January 1, 2034.
For questions about the credit, call Taxpayer Account Administration at 360-705-6115.
A person who sells electricity, natural gas or manufactured gas to a silicon smelter in Washington State.
To qualify for the credit a person must sell electricity, natural gas, or manufactured gas to a silicon smelter. The credit is equal to the gross amount of sales to the aluminum smelter by the corresponding rate of Business and Occupation (B&O) Tax and/or Public Utility Tax (PUT). However, this is only when it’s specified in a contract that the price of the electricity or gas sold to the smelter will be reduced by an amount equal to the credit.
File a quarterly report that includes
No Annual Tax Performance Report required.
Electronic filing not required.
Employers and property managers.
Employers and property managers who provide commute trip reduction incentives to or on behalf of their own or other employees.
Program expires July 1, 2024.
For questions about the application, call Taxpayer Account Administration at 360-705-6214.
Available to:
Persons who make qualified contributions.
Qualifying activity:
Contributions made to the Equitable Access to Credit Program through the Department of Commerce.
Reporting/documentation:
No credit may be earned for contributions made after June 29, 2027.
No credit may be claimed on returns filed after December 31, 2029.
For questions about the credit, call Taxpayer Account Administration 360-705-6214.
Special Notice - Equitable Access to Credit Program B&O tax credit
RCW
Effective June 9, 2022 (E2SHB 1015, Chapter 189, Laws of 2022).
Persons providing international services, such as computer; data processing; information; legal; accounting and tax preparation; engineering; architectural; business consulting; business management; public relations and advertising; surveying; geological consulting; real estate appraisal; or financial services in designated geographical areas.
Creating permanent full-time positions in international services located in a Community Empowerment Zone (CEZ) or designated International Services District. International services must be provided to persons domiciled outside the United States or be for use primarily outside this country.
$3,000 per year for each qualified employment position created. Additionally, $3,000 in credit can be taken in each of the following four years if the position is maintained.
For questions about the credit, call Taxpayer Account Administration at 360-705-6214.
All businesses that make qualified contributions.
A business must meet both requirements:
A business must make the total approved contribution to the designated Main Street Organization or Main Street Trust Fund by Nov. 15 of the same year they applied for the credit. If a business misses the Nov. 15 deadline, the credits are forfeited and become available to new applicants.
A business that is approved after Nov. 15, must make the total contribution by the end of the calendar year in which the contribution was approved.
The credit(s) earned will be available for use on excise tax return(s) the following calendar year. In order to use the credit, a business must have a B&O tax or a public utility tax liability equal to or exceeding the amount of the credit. Credits cannot be carried forward to the next calendar year or refunded.
Each year the department evenly allocates the credits allowed between the second Monday of January through March 31 by dividing the statewide cap of $5 million by the number of eligible Main Street Organizations and the Main Street Trust Fund.
Example: Assuming there are 33 Main Street Organizations including the Main Street Trust Fund, the first quarter cap is limited to $151,515 = ($5 million/33).
On April 1, if funds are still available under the statewide cap, eligible Main Street Organizations may receive additional contributions based on a first-come basis up to the $160K individual Main Street Organization cap, or until the statewide cap is met.
A business may not exceed $250K in total credits during a calendar year.
For questions about the application, call Taxpayer Account Administration at 360-705-6214.
All persons that make qualified contributions.
Cash contributions made to an approved Motion Picture Competitiveness Program (such as Washington Filmworks).
No credit may be earned for contributions made on or after June 30, 2030.
No credits may be claimed on returns filed after December 31, 2033.
For questions about the credit, call Taxpayer Account Administration 360-705-6214.
The credit, originally provided by RCW 82.04.4489, expired in 2011. Engross Second Substitute Senate Bill (E2SSB) 5539 passed in 2012 reinstated the credit program. Substitute Senate Bill (SSB) 5977 passed in 2017 modified the program. In 2022, Engrossed Substitute House Bill (ESHB) 1914 extends the expiration date of the credit program to July 1, 2030, increases individual and statewide program caps, and allows exemptions for filing the annual report requirements for individuals who made contributions to the program but do not receive funding assistance from the program.
Note: The reduced B&O tax rate is replaced by an exemption effective January 1, 2024.
Printers and/or publishers of newspapers as defined in RCW 82.04.214.
The reduced rate of 0.35 percent applies to gross income from printing and/or publishing of newspapers until December 31, 2023.
For questions about the reduced rate, call Taxpayer Account Administration at 360-705-6214.
Businesses primarily engaged in printing and/or publishing of newspapers or eligible digital content.
The exemption applies to gross income from printing and/or publishing of newspapers or eligible digital content..
Note: The exemption must be reduced by an amount equal to any expenditures as defined in RCW 42.17A.005 made by the business during the reporting period.
Expires Jan. 1, 2034.
For questions about the exemption, call Taxpayer Account Administration at 360-705-6214.
You can qualify for a public utility tax exemption if you are a light and power business that provides electricity to qualifying electrolytic processing businesses. This exemption expires July 1, 2029. You can only use the exemption for electricity sales you make on or before December 31, 2028.
A qualifying electrolytic processing business is a business that uses more than 10 average megawatts of electricity per month to split the chemical bonds of sodium chloride and water in one of the following ways:
As of June 10, 2004, sales of electricity to electrolytic processing businesses that contract for power from the Bonneville power administration, do not qualify for this exemption.
As a light and power business, you can qualify for a public utility tax exemption on your sales of electricity made to a qualifying chlor-alkali electrolytic processing business or a sodium chlorate electrolytic processing business for the electrolytic process if the contract for the sale contains all the following terms:
You cannot use this exemption for amounts you receive from the remarketing or resale of electricity that an electrolytic processor originally obtained by contract.
For questions about the program, call 360-705-6705.
Owners of underdeveloped land building affordable housing in a qualifying city.
Underdeveloped property means land used as a surface parking lot for parking motor vehicles off the street or highway, that is open to public use with or without charge.
A qualifying city is a city with a population of at least 135,000 but not more than 250,000 at the time the city initially establishes the program.
An application must be submitted before initiation of construction. Applications will not be accepted after June 30, 2032.
You must have a conditional certificate of approval from a qualifying city, or your application will be denied.
The investment project must be completed within three years of approval of the application. Additionally, the investment project requires occupancy of 50% or more of the project by qualified households starting in the year the certificate of occupancy is issued, plus the next nine years.
If all program requirements have been met, the deferred sales/use tax is waived by the department after the tenth year.
If requirements are not met, the deferred taxes are due.
Note: If you have income that requires you to file excise tax returns, you must also complete the Buyer’s Sales and Use Tax Preference Addendum.
Deferral program expires July 1, 2032.
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Motion picture and video production companies.
Rental of production equipment. The exemption does not extend to the purchase of production equipment.
Electronic filing not required
For questions about the exemption, call Taxpayer Account Administration at 360-705-6214.
Department of Commerce weatherization program contractors.
Purchase of tangible personal property that becomes a component part of a qualifying residence under the weatherization program administered by Department of Commerce.
Examples of qualifying weatherization materials include, but are not limited to the following:
• Insulation and sealants
• Parts for air infiltration
• Heating and cooling equipment
• Supplies used to seal and repair ducts
Note: Charges for labor and services used to install these materials continue to be subject to sales tax and use tax.
Electronic filing not required
For information on the weatherization program, contact Department of Commerce.
Sales and Use Tax Exemption for the Weatherization Assistance Program (pdf)
Owners and operators of anaerobic digesters.
You can apply for a property and leasehold excise tax exemption for property you use primarily to operate an anaerobic digester such as:
You can use this exemption for six assessment years after the date the facility or addition becomes operational.
You cannot apply for these exemptions after Dec. 31, 2024.
Beginning Aug. 1, 2019, a sales and use tax exemption for new or used clean alternative fuel and certain plug-in hybrid vehicles is available. The Department of Licensing maintains a list of qualifying vehicles.
The exemption is applied to the sales price or fair market value when you purchase or lease a passenger car, light duty truck, or medium duty passenger vehicle that is powered exclusively by a clean alternative fuel or capable of traveling at least 30 miles using only battery power.
In addition, the vehicle must be sold or valued at $45,000 or less if new and $30,000 or less if used.
Manufacturer and distributor rebates are part of the selling price. The amount of the rebate is not allowed to be used in any way to reduce the sales price or value.
The selling price includes delivery charges or any other services necessary to complete the sale (RCW 82.08.010).
Dealers may not deduct the value of any trade-in vehicle or any federal tax credits that may accrue to the lessor when determining exemption eligibility.
For qualified vehicles, the exempted amount is determined as follows:
|
New vehicles purchased |
Sales or use tax exemption available |
|---|---|
|
Aug. 1, 2019 - July 31, 2021 |
Up to $25,000 of the sales or lease price |
|
Aug. 1, 2021 - July 31, 2023 |
Up to $20,000 of the sales or lease price |
|
Aug. 1, 2023 - July 31, 2025 |
Up to $15,000 of the sales or lease price |
| Used vehicles purchased | Sales or use tax exemption available |
|---|---|
| Aug. 1, 2019 - July 31, 2025 | Up to $16,000 of the sales or lease price |
The auto dealer you purchase or lease the vehicle from must keep records to support the exemption. You, the buyer, do not need to report the exemption.
You may apply to the Department of Revenue by submitting an application for refund of use tax or refund of sales tax, if you paid sales or use tax in error between Aug. 1, 2019 and July 31, 2025.
For questions about the exemption, call 360-705-6705.
Businesses that use commercial vehicles to transport commodities, merchandise, produce, refuse, freight, animals or passengers, using vehicles that use clean alternative fuel. The vehicle must display a WA license plate.
Qualifying activity:
Purchases or leases of new commercial vehicles and qualifying used commercial vehicles with propulsion units that are principally powered by a clean alternative fuel. This includes:
Credit is not earned on vehicles purchased to lease to others.
Refer to the Special Notice Clean alternative fuel commercial vehicles and vehicle infrastructure tax credits expanded for information on how to calculate the credit, caps, and application dates.
Reporting/documentation requirements:
Statewide annual credit balances
(As of November 1, 2023)
Applied for: $2,907,665.03
Amount issued: $781,307.17
Remaining available: $5,218,692.83
Statewide annual credit cap of $6,000,000 for 2022 was met.
Statewide total credit balances
(From July 15, 2015 through November 1, 2023)
Applied for: $26,467,604.45
Amount issued: $12,652,172.05
Remaining available: $19,847,827.95
Note: The remaining available credit is the total annual statewide cap less any credits issued.
For questions about the application, call Taxpayer Account Administration at 360-705-6214.
Anyone who purchases an electric vehicle battery or fuel cell, or installs an electric vehicle battery, fuel cell charging station, or hydrogen fueling stations.
A sales tax exemption is available for purchases on or after July 28, 2019, and the use tax exemption is available on purchases on or after Aug. 1, 2019.
Electric vehicle infrastructure means structures, machinery, and equipment necessary and integral to support an electric vehicle, including battery charging stations, rapid charging stations, battery exchange stations, fueling stations that provide hydrogen for fuel cell electric vehicles, renewable hydrogen production facilities, and (as of June 9, 2022) green electrolytic hydrogen production facilities.
Expires July 1, 2025.
For questions about the exemptions, call 360-705-6705.
Anyone who purchases qualifying batteries or shoreside infrastructure.
Beginning July 1, 2020, purchases of:
Expires July 1, 2030.
For questions about the program, call 360-705-6705.
Anyone purchasing qualifying new vessels or qualifying new marine propulsion systems.
Beginning Aug. 1, 2019, purchases of:
Expires July 1, 2030.
For questions about the program, call 360-705-6705.
Purchasers of hog fuel. Hog fuel is defined as wood waste and other wood residuals including forest-derived biomass. It does not include firewood or wood pellets.
Producing electricity, steam, heat, or biofuel from hog fuel.
Expires June 30, 2034.
For questions about the exemption, call 360-705-6705.
Beginning July 1, 2022, a sales and use tax exemption is available for new or used electric vehicles powered by a hydrogen fuel cell. The Department of Licensing (DOL) maintains a list of qualifying vehicles.
The exemption is applied to the sales price or fair market value when you purchase or lease a passenger car, light duty truck, or medium duty passenger vehicle that is powered by a technology that uses an electrochemical reaction to generate energy by combining hydrogen and oxygen.
This exemption cannot be combined with the clean alternative fuel and plug-in hybrid vehicle exemption available under RCW 82.08.9999 and RCW 82.12.9999.
New qualifying vehicles will receive a 50% sales or use tax exemption. There is no purchase price or fair market value requirement to be eligible for this exemption. Once the Department of Revenue (DOR) determines that 650 new vehicles have qualified, the new vehicle exemption will expire after the last day of the immediately following month. New leased vehicles that qualified before the expiration date will continue to receive the exemption on lease payments.
Used qualifying vehicles will receive a 100% sales or use tax exemption up to $16,000 of the sales price or the fair market value at the inception of the lease.
If you purchase or lease the vehicle from a licensed business, the seller must keep records and provide information to DOR to support the exemption. If you purchase the vehicle from a private or non-licensed party, you must keep records and submit itemized information for any vehicle you wish to claim an exemption on. At a minimum, this information includes: vehicle make, model, model year, date of sale, sales price, and the total amount qualifying for the incentive.
If you paid sales tax on a qualifying vehicle at a dealership and would like to request a refund, you may apply to DOR by submitting a green transportation application for refund of sales tax.
If you registered your qualifying vehicle with DOL and paid use tax, you may apply to DOR for a refund by submitting a refund of use tax application.
This program expires June 30, 2029. Any exemption under this program will terminate as of that date if it had not previously expired.
For questions about the exemption, call 360-705-6705.
Qualifying utilities that provide incentive payments to owners of qualifying covered commercial buildings or multifamily residential buildings meeting certain energy performance standards.
The qualifying utility (taxpayer) does not need to apply to the Dept. of Revenue to claim the credit.
Expires June 30, 2032.
For questions about the credit, call Taxpayer Account Administration at 360-705-6218.
Public transportation agencies, major employers, and employees of major employers purchasing ride-share vehicles.
To qualify for a sales or use tax exemption, the passenger motor vehicle purchased must:
A buyer must present the seller with a completed Buyer's Retail Sales Tax Exemption Certificate form, declaring the purpose and intent of the vehicle.
The law requires a business taking an exemption to report it on the Buyers Sales and Use Tax Preference Addendum within My DOR.
When reporting the sale on the excise tax return, a seller may claim the Sales of Qualified Ride-sharing Vehicles deduction from retail sales tax.
For questions call 360-705-6705.
Available to:
Persons making purchases of materials and equipment, labor, or services to be incorporated in an eligible “clean technology” investment project.
Program requirements:
An eligible investment project with costs of at least $2 million in either qualified buildings and/or qualified machinery and equipment, for any of the following new, renovated, or expanded:
Applying for a deferral:
Applications can be found at dor.wa.gov under Deferral forms. You must complete the application prior to the initiation of construction. Applications will not be accepted after June 30, 2032.
Paying deferred taxes:
The deferred tax must be repaid in 10 equal payments beginning the second year after the project is operationally complete. Payments are due December 31 of each of the years.
The deferral recipient may receive a reduction of the state sales and use taxes owed as follows:
Manufacturing operations means manufacturing tangible personal property exclusively incorporated as an ingredient or component of or used in the generation of:
Purchases of tangible personal property that becomes a component of an anaerobic digester. Construction, installation, repairs, and improvements to:
Buyers must:
Note: No Annual Tax Performance report is required.
Sellers must:
Expires January 1, 2029.
For questions about the exemption program, call Taxpayer Account Administration at 360-705-6218.
Tax incentives for converting biogas into marketable coproducts and manufacturing wood biomass fuel (pdf)
Available to:
Persons constructing solar canopies placed on large-scale commercial parking lots at qualifying commercial centers.
Applying for a deferral:
The application must be submitted before initiation of construction.
Applications will not be accepted after June 30, 2032.
Applications are available at dor.wa.gov under Deferral forms.
Deferral program requirements
The recipient of a deferral certificate must begin meaningful construction on an eligible investment project within one year of receiving a deferral certificate. If the project is not complete within two years of the issuance of the certificate, all taxes will be due and payable. The solar canopy must remain in operation for eight years (the first year when operationally complete plus seven years after).
Paying deferred taxes:
The deferral recipient must repay all or a portion of the deferred taxes. The first payment of 12.5 percent of the deferred taxes is due on December 31st of the second calendar year after the project is operationally complete, with subsequent annual payments of 12.5 percent of the deferred taxes due on December 31st for each of the following seven years.
Recipients may qualify for a reduction in the amount of state and local deferred taxes owed, depending on the project’s compliance with certain labor standards.
The deferral recipient may receive a reduction of the state sales and use taxes owed as follows:
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Special notice: Solar canopy retail sales and use tax deferral
Chapter 82.90 RCW
ESSB 5714, Chapter 161, Laws of 2022
Dept. of Labor and Industries – Clean energy projects
Manufacturers, manufacturers that sell their product at wholesale, and processors for hire of solar energy systems and specified components of solar energy systems using photovoltaic modules or stirling converters.
Manufacturing, wholesaling by the manufacturer, and processing for hire of solar energy systems and specified components of solar energy systems using photovoltaic modules or stirling converters.
Expires July 1, 2032.
For questions about the program, call Taxpayer Account Administration at 360-705-6218.
Buyers of solar energy systems and installation.
Purchases of machinery and equipment used directly in a solar energy system if both of the following apply:
Purchases of installation services for qualifying solar systems may also be eligible for the sales tax exemption. Installation must begin on or after July 1, 2019, and be completed by Dec. 31, 2029. The installer must meet all of the following criteria at the time of sale:
Buyers must:
Provide a completed Buyers’ Retail Sales Tax Exemption Certificate to sellers on purchases of equipment, and to installers for labor services.
Note: If the seller charged you tax you may apply for a refund.
Sellers and installers must:
Keep the completed exemption certificate in their records for five years.
Note: A business who is also a buyer must file an Annual Tax Performance Report by May 31 of the calendar year following the purchase date. The business must file a separate tax performance report for each facility owned or operated in the state of Washington using machinery, equipment, services or labor for which the exemption is claimed.
Expires Jan. 1, 2030.
For questions about the exemption, call Taxpayer Account Administration at 360-705-6218.
Manufacturers, research and development (R&D) facilities, and commercial testing facilities located in rural counties or within a community empowerment zone (CEZ). See list of rural counties and CEZs.
Creating new, permanent, full-time, employment positions at qualifying facilities that increase employment by at least 15% over the following four calendar quarters from the period in which the employee was hired.
Example: The first qualifying position is hired on Feb. 2, 2020. In order to meet the requirements for the credit, the business must create new employment positions that increase total employment by 15% or more by March 31, 2021.
You must mail or fax the Rural Area Application for New Employee B&O Tax Credit within 90 days of filling the first qualified position.
You must mail or fax the Rural Area Annual Report for New Employee B&O Tax Credit on the last day of the month immediately following the end of the four consecutive full calendar quarter period. A second annual report is due one year after the first report.
You may apply for future credits as long as each set of four consecutive quarters continues to have employment expansion that meets the 15% increase.
The credit may be claimed against any B&O tax due, and may be carried over until used. No refunds of the credit will be granted.
For questions about the paper application and report, please call Taxpayer Account Administration at 360-705-6214.
Available to:
Manufacturers or businesses that conditions vegetable seeds, research and development and commercial testing for manufacturers in an eligible county or in a Community Empowerment Zone (CEZ).
This program expired Dec. 31, 2010. We will not accept applications.
For questions about deferrals, please email DORDeferrals@dor.wa.gov or call our Deferral Program Lead at 360-534-1443.
Manufacturers or processors for hire of semiconductor materials.
Manufacturing or processing for hire of semiconductor materials. For purposes of the reduced B&O tax rate “Semiconductor materials" means silicon crystals, silicon ingots, raw polished semiconductor wafers, and compound semiconductor wafers.
You must maintain at least 90% of your employment average for the previous three years in the year you claim the tax preference, or you must repay 50% of the preference claimed.
Expires December 1, 2028.
For questions about the program, call 360-705-6705.
Semiconductor Materials Manufacturers Tax Incentives Extended (pdf)
Manufacturers or processors for hire of semiconductor materials.
Purchasing gases and chemicals in the production of semiconductor materials. For purposes of the sales/use tax exemption “Semiconductor materials" means silicon crystals, silicon ingots, solar grade silicon, raw polished semiconductor wafers, compound semiconductor wafers, silicon solar wafers, silicon solar cells, thin film solar devices, or compound semiconductor solar wafers.
You must maintain at least 90% of your employment average for the previous three years in the year you claim the tax preference, or you must repay 50% of the preference claimed.
Expires December 1, 2028.
For questions about the exemption, call 360-705-6705.
Semiconductor Materials Manufacturers Tax Incentives Extended (pdf)
Sales tax paid on:
Warehouse tax incentive application for remittance packet should include:
We highly recommend submitting the application and documentation electronically through My DOR web messaging in the following format:
Quickly access all you need to file a complete application using the links below that correspond with your remittance type. To quicken the refund process, submit your application packet electronically with all necessary documentation.
Call Taxpayer Account Administration at 360-705-6217 or send a web message from your My DOR excise tax account with a topic of warehouse tax incentive application.
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