The Joint Legislative Audit and Review Committee presented a review of eight tax preferences intended to increase adoption of alternative-fuel vehicles in Washington, noting large growth in electric vehicles and charging infrastructure but saying the preferences' contribution to that growth is unclear.

Pete Van Moorsil, staff to JLARC, told the House Finance Committee that “the legislative auditor concludes that alternative fuel vehicles and associated infrastructure have increased in Washington, but that the effect of the preferences is unclear because changes in the market and other increased state and federal incentives also influence adoption of these technologies.”

JLARC estimated the eight preferences will reduce state revenue by about $98,000,000 in the current biennium. The largest single preference is a sales-and-use tax exemption for qualifying alternative-fuel vehicle purchases, which JLARC estimated saved $53,000,000 in the biennium. Eligibility for that exemption requires a vehicle to be entirely powered by a clean alternative fuel listed in statute or be a plug-in hybrid with an electric range of at least 30 miles. The exemption is partial (currently up to $15,000) and the allowable exempted amount declines every two years; statute caps eligible vehicle purchase prices at $45,000 for new vehicles and $30,000 for used vehicles.

JLARC staff reported that Department of Licensing data show alternative-fuel vehicle registrations increased roughly 230% since the earliest availability of the preference through 2023, but just over 40,000 vehicles actually claimed the preference in that window. The review also documented growth in zero-emission commercial, school, and transit buses and more than 3,000 additional public electric chargers.

Van Moorsil said the increase in EV adoption occurred while the value of the tax preference was diminishing and that other policies—state and federal incentives, falling EV prices and a broader vehicle model mix, and expanded charging networks—likely contributed to adoption independent of the tax preferences. The legislative auditor therefore recommended the Legislature determine whether to continue the eight preferences, and if so, at what level. JLARC suggested consulting the Electric Vehicle Coordinating Council if amendments are considered.

A Department of Commerce response included in JLARC materials concurred with the audit recommendation and urged reallocating some limited funds from tax expenditures to rebate programs, aligning the sales-and-use exemption with the state's EV instant rebate program, and further incentivizing zero-emission school and transit buses.

The committee paused for questions and members raised clarifying points about the inclusion of natural gas and propane in the statute’s definition of “clean alternative fuel,” and whether those vehicle types materially affected counts; JLARC staff said natural-gas vehicles are a small share (about 1,300 vehicles statewide) relative to electric and plug-in hybrid totals.

JLARC’s presentation concluded that the Legislature must decide whether the objective in statute is still being met and, if continuing preferences, clarify performance expectations or adjust the design to coordinate with other state programs.

Looking forward, JLARC recommended policymakers weigh whether to continue the preferences, modify their values or eligibility, and coordinate with the Electric Vehicle Coordinating Council and relevant agencies to align tax provisions with rebate and procurement programs.