~237

Alternative Fuel Vehicle (AFV) Tax Exemption

New passenger cars, light-duty trucks, and medium-duty passenger vehicles that are dedicated AFVs are exempt from state motor vehicle sales and use taxes. Qualified vehicles must operate exclusively on natural gas, propane, hydrogen, or electricity; meet the California motor vehicle emissions standards; have a fair market value less than $35,000; and comply with the rules of the Washington Department of Ecology. The sales tax exemption expires July 1, 2019. A vehicle purchased or leased before July 1, 2019, is exempt from the use tax until it is retired or changes hands. Qualified vehicles leased before July 1, 2015, are not subject to the $35,000 fair market value requirement. (Reference Revised Code of Washington 82.08.809 and 82.12.809)

Natural Gas Vehicle Tax Exemptions

Compressed natural gas (CNG) and liquefied natural gas (LNG) used as a transportation fuel are exempt from the state and local sales, use, and public utility taxes. In addition, natural gas distribution businesses are eligible for an exemption for machinery and equipment used for the production of CNG and LNG for transportation fuel. This exemption is available quarterly as a remittance beginning on July 1, 2017. (Reference Senate Bill 6440, 2014, and Revised Code of Washington 82.14, Revised Code of Washington 82.16, Revised Code of Washington 82.21, and Revised Code of Washington 82.08.02565)

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Emissions Inspection Exemption

Dedicated electric, compressed natural gas, and propane vehicles are exempt from state emissions control inspections. HEVs that obtain a U.S. Environmental Protection Agency fuel economy rating of at least 50 miles per gallon during city driving are also exempt from these inspections (Reference Revised Code of Washington 46.16.015 - NOTE: Recodified as 46.16A.060)

Natural Gas Tax Exemptions

Effective July 1, 2015, compressed natural gas (CNG) and liquefied natural gas (LNG) used as a transportation fuel are exempt from the state and local sales, use, and public utility taxes. In addition, natural gas distribution businesses are eligible for an exemption for machinery and equipment used for the production of CNG and LNG for transportation fuel. This exemption is available quarterly as a remittance beginning on July 1, 2017.(Reference Revised Code of Washington 82.08.02565 - 82.08.02565 and 82.38.030)

LDC/Utility / Private Incentives

Clean and Efficient Fleet Assistance

The Puget Sound Clean Cities Coalition, in partnership with the Puget Sound Clean Air Agency, offers the Evergreen Fleets program, a comprehensive greening plan and certification system for fleets. Evergreen Fleets provides fleet managers with tools to help "green" public and private fleets, reduce pollution, and save money. Evergreen Fleets provides a step-by-step guide to identify the most effective way for fleet managers to green their fleets, including buying greener vehicles, switching to cleaner fuels, or improving fleet efficiency.

Point of Contact
Stephanie Meyn
Clean Cities Coordinator
Western Washington Clean Cities Coalition
Phone: (206) 689-4055
Fax: (206) 343-7522
stephaniem@pscleanair.org
http://www.wwcleancities.org/

Provision for Alternative Fuels Corridor Pilot Projects

The Washington State Department of Transportation (WSDOT) may enter into partnership agreements with other public and private entities to use land for alternative fuel corridor pilot projects. In particular, WSDOT should continue to build out the electric vehicle charging network along state highways and at key destinations. Minimum requirements apply and these agreements are subject to funding availability. (Reference Executive Order 14-04, 2014, and Revised Code of Washington 47.38.070

Alternative Fuel Vehicle (AFV) Labeling Requirement

Every alternative fuel automobile, truck, motorcycle, motor home, or off-road vehicle must bear a reflective placard from the National Fire Protection Association indicating that the vehicle is powered by an alternative fuel. Alternative fuels include propane, compressed natural gas, and liquefied natural gas. (Reference Senate Bill 6440, 2014, and Revised Code of Washington 46.37.467

Alternative Fuel Vehicle (AFV) Annual Fee

Owners of compressed natural gas (CNG), liquefied natural gas (LNG), and propane powered vehicles are required to pay an annual license fee, based on gross vehicle weight rating (GVWR), instead of motor fuel excise taxes. The fee is calculated as follows:

GVWR Fee
Less than 10,000 pounds (lbs.) $45
10,001 - 18,000 lbs. $80
18,001 - 28,000 lbs. $110
28,001 - 36,000 lbs. $150
More than 36,000 lbs. $250
To determine the actual annual license fee imposed per registration year, multiply the appropriate dollar amount given in the above schedule by the motor vehicle fuel tax rate in cents per gallon effective on July 1 of the preceding calendar year, and divide the resulting amount by $0.12. There is an additional $5 handling fee for each license issued.

By December 1, 2014, the Washington Department of Transportation (DOT) must convene a work group and submit recommendations to the legislature on an annual license fee that more closely represents the average fuel consumption of vehicles by weight. By December 1, 2015, the work group must also develop a transition plan to move more CNG and LNG vehicles from the license fee to the fuel tax under Revised Code of Washington 82.38.030. The transition plan must incorporate stakeholder feedback and include draft legislation and cost and revenue estimates. The work group must include representatives from DOT, the trucking industry, CNG and LNG manufacturers, and other stakeholders.

(Reference Senate Bill 6001, 2014, and Revised Code of Washington 82.36.025 and 82.38.075

State Vehicle Purchasing Guidance

The Washington Department of Enterprise Services must develop guidelines and criteria for the purchase of high mileage gasoline vehicles as well as alternative fuel vehicles and systems that reduce the overall costs and energy use in the state. The guidance should include investigations into all opportunities to aggregate the purchasing of clean technologies with state and local governments, as well as federal fuel economy standards. (Reference Revised Code of Washington 39.26.090, 43.19.570, and 43.19.663

Low Carbon Fuel and Fuel-Efficient Vehicle Acquisition Requirement

Washington state agencies must consider purchasing low carbon fuel vehicles or converting conventional vehicles to use low carbon fuels when financially comparable over the vehicle's useful life. Low carbon fuels include hydrogen, biomethane, electricity, or natural gas blends of at least 90%. State agencies must phase in fuel economy standards for motor pools and leased conventional vehicles to achieve an average fuel economy of 36 miles per gallon for passenger vehicle fleets by 2015. State agencies must also purchase low carbon fuel vehicles or, when purchasing new conventional vehicles, achieve an average fuel economy of 40 miles per gallon (mpg) for light-duty passenger vehicles and 27 mpg for light-duty vans and sport utility vehicles. When calculating average fuel economy, emergency response vehicles, passenger vans with a gross vehicle weight rating of 8,500 pounds or greater, off-road vehicles, low carbon fuel vehicles, and vehicles driven less than 2,000 miles per year are excluded. (Reference Revised Code of Washington 43.41.130

2016 Session - Proposed Legislation

HB-2278

Introduced version amended the sales and use tax to increase the dollar amount of vehicles purchases or leased up from $35K to $37K, and even higher in case of some electric vehicles that meet certain performance requirements. Enrolled version retains $32,000 limit on exemptions and retains $35,000 vehicle value limit. The provision also previously would have expired in 2019 but now expires in second month after 7,500 qualifying vehicles are registered. Reference - HB2278 Bill History, Reference - HB2278 Bill Text Status: Passed House 2/16/16; passed Senate 3/29/16 - the enacted version includes new cap of $42,500 for vehicles but only $32,000 of the value is exempt from sales and use tax. Exemption expires earlier of July 1, 2019 or month following month that Department of Revenue is informed that number of qualifying vehicles reached 7,500. On November 8, 2016, Ballot Advisory Note 15 was adopted thereby repealing the changes and limitations adopted in HB 2778.

HB-2665

Repeals certain tax exemptions and stipulates that the sales and use tax for alternative fuel vehicles will expire as of July 1, 2017 unless appropriations are provided to extend this incentive. The sales and use taxes currently are set to expire July 1, 2019. The incentives currently are found in 82.08.809 and WA RCW 82.12.809. Reference - HB2665 Bill History, Reference - HB2665 Bill Text

HB-2761

Amends the current business and occupation tax credit for commercial alternative fuel vehicles to include leased vehicles. Lessee claims credit. Status: referred to Transportation Committee. Reference - HB2761 Bill History, Reference - HB2761 Bill Text

HB-2884

Amends the current business and occupation tax credit for commercial alternative fuel vehicles to include leased vehicles. Lessee claims credit. Value of credits is subject to the lead reduction factor: gross capital cost less residual value divided by gross cap cost multiplied by credit value. Credits available July 1, 2016 - Jan. 1, 2021. Reference - HB2884 Bill History, Reference - HB2884 Bill Text Status: referred to Transportation Committee. / Signed by the Governor 3/25/16

---

2015 Session - Proposed Legislation

HB-1300

Amends the sales and use tax exemption in order to establish specific dollar limits and to extend it until 2025 as it currently expires after July 1, 2015. With these changes the first $60K is exempt from sales and use tax both for new and converted vehicles but only for dedicated vehicles or those exclusively powered by alternative fuel. Used vehicles have additional requirement that they must be part of fleet of 5 or more vehicles. Note EPA aftermarket conversion qualify even though WA is a CARB state. Reference - HB1300 Bill History, Reference - HB1300 Bill Text

HB-1396

Sales and use tax exemption for alternative fuel vehicles both new and converted (if less than 2 years old). Qualifying vehicles must be commercial motor vehicles. Also provides a tax credit that can be applied against business, occupation or public utility taxes. The value of the tax credits is as follows: lesser of $25,000 or 15% of cost of qualifying new vehicle, or $25,000 or 30% of cost of a conversion. There is a $250K cap per person per year. The incentives are available until 2026. The vehicle credits available on a first-come basis and limited to $6 million per year. April 14 subst. version includes tax credits for 3 classes of vehicles: 50% or up to $5K for vehicles at or below 14,000 lbs.; 50% or $10K of 14,001 - 26,500 lbs; $20K for vehicles above 26,500 lbs. Annual limits of $2 million per class. Credits available through 2025. Effective Jan. 1, 2016. Reference - HB1396 Bill History, Reference - HB1396 Bill Text Status: Passed as substitute 4/14/15; in second special session; in third special session;

HB-1925

Includes same provisions as in HB 1300, a much longer bill. Amends the sales and use tax exemption in order to establish specific dollar limits and to extend it until 2025 as it currently expires after July 1, 2015. With these changes the first $60K is exempt from sales and use tax both for new and converted vehicles but only for dedicated vehicles or those exclusively powered by alternative fuel. Used vehicles have additional requirement that they must be part of fleet of 5 or more vehicles. Note EPA aftermarket conversion qualify even though WA is a CARB state. Reference - HB1925 Bill History, Reference - HB1925 Bill Text

HB-1966

Amends the code that defines "to manufacture" so that it does not extend to transit agencies who compress or liquefy natural gas for their use. Substitute clarifies that this only relates to municipalities that operate transit buses. Reference - HB1966 Bill History, Reference - HB1966 Bill Text

HB-2087

Like HB 1925 this bill exempts portion of the cost of clean fuel vehicle from sales and use tax. In this case, it is first $35K of the cost for new or converted vehicles including passenger, light trucks and medium duty vehicles. Vehicles must be dedicated and conversions must be part of fleet of 5 or more vehicles. Extends the current exemption (2015) until July 1, 2019. Bill also provides grant for electric vehicle infrastructure along corridors. This program is funded in part with fees charged for EV registration. Current law appears to impose additional $100 on EVs but this bill would add new $50 and $25 fee as well. Substitute offered 4/1/15 drops requirement that vehicles be part of fleet of 5 more. Also limits incentive to vehicles that cost $35K or less. Reference - HB2087 Bill History, Reference - HB2087 Bill Text

SB-5325

Companion to HB 1396. Reference - SB5325 Bill History, Reference - SB5325 Bill Text

SB-5333

This bill directs that registration fees collected on electric vehicles ($100) are to be deposited in a low-interest loan fund to support EV infrastructure. Currently funds are deposited to fund highways. Also extends the current sales and use tax exemption for clean fuel vehicles until July 1, 2021. With this extension, the first $45,000 for new or used vehicle sales are exempted. Subst. version remove the EV change and lowers the tax preference figure to $40,000 instead of $45,000. Reference - SB5333 Bill History, Reference - SB5333 Bill Text

SB-5358

Companion to HB 1300. Reference - SB5358 Bill History, Reference - SB5358 Bill Text

SB-5445

Companion to HB 1300. Amends the sales and use tax exemption in order to establish specific dollar limits and to extend it until 2025 as I currently expires after July 1, 2015. With these changes the first $60K is exempt from sales and use tax both for new and converted vehicles but only for dedicated vehicles or those exclusively powered by alternative fuel. Used vehicles have additional requirement that they must be part of fleet of 5 or more vehicles. Note EPA aftermarket conversion qualify even though WA is a CARB state. Reference - SB5445 Bill History, Reference - SB5445 Bill Text

SB-5987

Amends the sales and use tax exemption to extend it past July 1, 2015 until July 1, 2019 and to exclude conversions of used vehicles. Only new vehicles exclusively powered by alternative fuel will quality for the incentives as extended. Also provides tax credit for vehicles that are principally powered by alternative fuel including natural gas new or converted. Credits are worth 50% of incremental cost up to maximum of: $5K for vehicles 0 - 14,000 GVWR, $10K - 14,001 - 26,500 GVWR, and $20K for larger vehicles. The credits are available 2016 - 2020. Each vehicle category may qualify for up to $2 million in annual credits and there is a $250K limit on companies. Reference - SB5987 Bill History, Reference - SB5987 Bill Text Status: Enrolled 7/1/2015; Enacted 7/15/2015

---

2014 Session - Proposed Legislation

HB-2418

Extends the sales and use tax exemption for alternative fuel vehicles. Requires audit to determine how effective the exemption is in increasing use of alternative fuel vehicles. Currently this incentive expires July 1, 2015 but now would expire July 1, 2023. Reference - HB2418 Bill History, Reference - HB2418 Bill Text 2014-01-28 - Public hearing in the House Committee on Finance at 8:00 AM.

HB-2671

Amends the current sales and use tax exemption language to make it clear that the provision only applies to use of alternative fuels to directly power the vehicle not to power auxiliary engines. Reference - HB2671 Bill History, Reference - HB2671 Bill Text 2014-02-04 - Public hearing in the House Committee on Finance at 8:00 AM.

HB-2672

Convenes a working group to assess the current vehicle license fee imposed on natural gas vehicles to determine if the rates are sufficient, and to develop transition plan to move to excise tax.Reference - HB2672 Bill History, Reference - HB2672 Bill Text 2014-02-10 - Public hearing, executive session scheduled, but no action was taken in the House Committee on Appropriations at 10:00 AM.

HB-2753

Companion to SB 6440. 2/10/2014 substitute version offered; makes major changes including using decals instead of excise tax. Reference - HB2753 Bill History, Reference - HB2753 Bill Text 2014-02-25 - Public hearing in the House Committee on Finance at 8:00 AM.

SB-6001

Convenes a working group to assess the current vehicle license fee imposed on natural gas vehicles to determine if the rates are sufficient, and to develop transition plan to move to excise tax. Says that this provision will become law if both SB 6440 and HB 2754 are not enacted by 6/30/2014. SB 6440 did become law. Reference - SB6001 Bill History, Reference - SB6001 Bill Text Enacted 4/4/2014

SB-6268

Companion to HB 2418. Reference - SB6268 Bill History, Reference - SB6268 Bill Text 2014-01-27 - Public hearing in the Senate Committee on Ways & Means at 3:30 PM.

SB-6440

Amends the motor fuel taxes so that LNG pays existing rate per 1.5 gls., and CNG pays per 127 cu. ft. However, the bill continues the decal or annual license fee that includes CNG and LNG vehicles. Clarifies that IFTA registered vehicles are subject to the annual fee but not the handling fee and the requirement to display the decal. Out of state vehicles not subject to IFTA registration are exempt from the annual licensing fee. The bill exempts natural gas from certain taxes and appears to exempt natural gas used to compress CNG or LNG from utility and sales taxes; provides exemption from the use tax if CNG or LNG are used for transportation purposes. Appears to also provide exemption from local utility taxes (need to clarify). 3/4/14 version removes the excise tax provisions and instead uses the decal system for taxation. Removes use of the 100 cubic feet conversion factor. Also defines "manufacture" to include the production of CNG or LNG. Reference - SB6440 Bill History, Reference - SB6440 Bill Text Enacted: 2014-04-03 - Effective date 7/1/2015.

SB-6215

Amends the current sales tax exemption provided for certain activities to clarify that the 75% exemption applies to equipment used to produce pipeline quality natural gas from landfill gas. This exemption is available from 2011 - 2019. Reference - SB6215 Bill History, Reference - SB6215 Bill Text Pending: House Rules Committee

SB-6577

Increases motor fuel taxes by 4 cents includes CNG. However, there are two sections that increase tax on CNG and one section increases it by four cents each of three consecutive years. Looks like other fuels also have similar increase in tax rate. But the CNG rates are not helpful because they are per 100 cubic feet of NG. Reference - SB6577 Bill History, Reference - SB6577 Bill Text Pending: Senate Transportation Committee

SB-6562

Extends the current sales and use tax exemption available to alternative fuel vehicles until July 1, 2015 to also include extended range electric vehicles. Reference - SB6562 Bill History, Reference - SB6562 Bill Text Pending: Senate Ways & Means Committee

SB-6496

Companion to HB 2671 Reference - SB6496 Bill History, Reference - SB6496 Bill Text

---

Pending: Senate Energy, Environment & Telecommunications Committee

2013 Session - Proposed Legislation

HB-1883 - Enacted 5/2013

Very large bill. Makes minor modifications to the fuel tax provisions does not appear to change the fuel tax on CNG and LNG or the decal system that is in place, although it does appear to strengthen the prohibition on selling natural gas to users who do not have decals. Reference - HB1883 Bill History, Reference - HB1883 Bill Text Signed by Governor 5/14/2013

HB-1954

Increases the tax on motor fuels phased in over a period of time with 2 cents added each year for 2013 - 2017. Changes would impact CNG which is already taxed in the state as a motor fuel based on each 120 cubic inches of CNG; does not appear to make any changes otherwise or mention LNG. Reference - HB1954 Bill History, Reference - HB1954 Bill Text Introduced on February 22 2013 - 2013-06-29 - By resolution, returned to House Rules Committee for third reading.

SB-5849

Makes it illegal to park in space reserved for alternative fuel vehicle refueling; sets fine at a maximum of $250. Reference - SB5849 Bill History, Reference - SB5849 Bill Text Passed on April 23 2013