Pete Van Moorsil, staff to the Joint Legislative Audit and Review Committee, told the House Finance Committee on Jan. 14 that eight tax preferences intended to increase adoption of alternative-fuel vehicles and supporting infrastructure together reduce state revenue by an estimated $98,000,000 in the current biennium.

The preferences include a sales-and-use tax exemption for qualifying alternative-fuel vehicle purchases (the largest, about $53,000,000 in the biennium), a sales-and-use tax exemption for batteries and charging infrastructure, exemptions and credits tied to commercial vehicles and public charging, a sales-and-use exemption for zero-emission buses, and a leasehold excise tax exemption for use of public land for charging infrastructure. To qualify for the principal sales-and-use exemption, a new vehicle must be priced at $45,000 or less (used vehicles $30,000 or less) and meet other eligibility rules; the exempt amount is a partial exemption that declines every two years and is scheduled to expire in August 2025.

JLARC found that the number of alternative-fuel vehicles titled in Washington rose sharply—about 230 percent since the preference became available through the end of 2023—but that the increase cannot be attributed solely to the tax preferences. Department of Licensing data show just over 40,000 vehicles claimed the preference during the review period. Other concurrent factors included falling retail prices for electric vehicles, a wider variety of models, federal and state incentives, and expansion of public charging: JLARC counted more than 3,000 additional public electric chargers in the same period. JLARC therefore concluded that the preferences’ objective (to increase alternative-fuel vehicle titles in the state) has been met in aggregate but that the preferences’ specific contribution is unclear.

Because the principal exemption has been diminishing in value and several other incentives and market changes have occurred, JLARC recommended the Legislature determine whether to continue the eight preferences, and if so, at what level or under what modifications. JLARC also recommended that the Legislature consult the Electric Vehicle Coordinating Council, chaired by the Departments of Commerce and Transportation, before making statutory changes. The Department of Commerce provided comments supporting JLARC’s recommendation and suggested shifting some limited state funds from tax expenditures to rebate programs, aligning the sales-and-use tax exemption with the state’s instant rebate program, and working with state agencies to incentivize zero-emission school and transit buses.

Committee members were also briefed on qualification details and the timing for proposed substitutes and amendments to tax policy; Chair April Berg reminded members of the committee’s distinct timing rules for releasing substitute and amendment drafts. The preferences reviewed have varying expiration dates; the earliest expires July–August 2025, which JLARC flagged as a near-term decision point for the Legislature.

Legislative staff and JLARC told the committee that if the Legislature chooses to continue any preference it should clarify the performance metric it expects (for example, a target number of titled zero-emission vehicles or chargers), because the current performance statements do not define distinct continuing thresholds for recommending continuation versus termination.

The committee received JLARC’s findings to inform potential bills in the 2025 session. JLARC’s full review, including data tables and methodology, is available in the JLARC report referenced in the committee materials.