WashingtonHB 20772025-2026 Regular SessionHouse

Establishing a tax on certain business activities related to surpluses generated under the zero-emission vehicle program.

Sponsored By: Joe Fitzgibbon (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 0 benefits, 1 costs, 1 mixed.

Carmakers pay new vehicle credit taxes

Beginning May 20, 2025, Washington taxes surplus zero-emission vehicle credits banked or sold after that date. These credits come from exceeding clean-vehicle requirements for passenger cars and light- and medium-duty vehicles, not heavy trucks. Manufacturers are exempt when credits banked or sold represent fewer than 25,000 vehicles in a model year. At or above that threshold, all qualifying credits banked or sold that year are taxed. Sales to another manufacturer face a 2% tax on the sale price. Banked credits face a yearly tax of 10% of the model-year average credit price. Credits held into the next model year count as sold for this banking tax; qualifying credits transferred out of state are excluded. Revenue officials begin publishing average prices November 1, 2026, using the latest available model-year average when no transactions occur. Published averages are final, even if manufacturers later amend their reports. Tax notices are due January 31 following the calendar year; notices for model years 2024 and 2025 may arrive by January 31, 2027. Existing tax penalties and interest apply to unpaid amounts. Electric-vehicle incentives receive 30% of proceeds. The remaining 70% goes to the General Fund through June 30, 2027, then to the Carbon Emissions Reduction Account. The law does not directly change household taxes or benefits.

Carmakers report credits but keep prices private

Manufacturers must report zero-emission vehicle credit holdings, purchases, sales, and prices, starting with model year 2024. Reports include banked credits from earlier years and each transaction's date, other manufacturer, credit amount, and model year. Manufacturers must provide both the price per credit and the total transaction price in the required form. Ecology sends manufacturer-level details to Revenue by October 31 each year for the preceding model year. Sales of model-year 2023 credits made before May 20, 2025, are reported with model-year 2024 sales. Individual sale prices are exempt from public disclosure. Revenue may publish only grouped price data covering a calendar quarter or longer, without revealing any specific transaction's price. This protects manufacturers' deal details but limits public access to those prices.

Sponsors & Cosponsors

Sponsor

Joe Fitzgibbon
Democratic • House

Cosponsors

Nicole Macri
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 135 • No: 106

Senate vote • 4/26/2025

3rd Reading & Final Passage

Yes: 28 • No: 19 • Other: 1

House vote • 4/22/2025

Motion to Place Measure on 3rd Reading & Final Passage

Yes: 55 • No: 42 • Other: 1