A transportation bill contains a new tax obligation that will affect any Washington retailer who sells or leases high-end vehicles.
Most Washington retail business owners haven't heard about it yet, but a provision buried in HB2711 creates a direct new tax collection and remittance obligation for anyone selling or leasing motor vehicles priced above $100,000. If that describes your business, you need to understand what's coming.
Effective July 1, 2026, Washington will impose an 8% tax on the portion of any motor vehicle sale or lease that exceeds $100,000. The threshold is adjusted annually, but for fiscal year 2026 it starts at $100,000.
Here's what that means in practice: if you sell a vehicle for $150,000, you must calculate and collect an 8% tax on the $50,000 that exceeds the threshold—that's $4,000 in additional tax per transaction. You become responsible for remitting that tax to the state, and you must track and report it correctly.
The law applies to any business entity that sells or leases a motor vehicle over the threshold. That includes traditional dealers, independent sellers, leasing companies, and any other retail operation handling high-end vehicle transactions. The obligation falls on the seller or lessor to collect and remit.
This isn't a passive tax. You must:
The law also creates personal liability for responsible individuals at your business under what's known as the trust fund recovery penalty—meaning owners or managers can be held personally accountable if the tax is collected but not remitted.
July 1, 2026: The tax takes effect. Any vehicle sale or lease above $100,000 on or after this date is subject to the 8% tax.
September 30, 2027: This is the deadline for a penalty and interest waiver on any prior periods where the tax should have been collected. After this date, standard penalties and interest apply to unpaid amounts.
The provision is found in Section 201 of HB2711, on page 7 of the bill text.
If your business sells or leases vehicles in this price range, begin planning now. Review your current point-of-sale systems to confirm they can calculate and track this tax separately. Consult with your accountant or tax advisor about how to integrate the new obligation into your remittance schedule. If you have questions about how the threshold applies to your specific transactions, contact the Washington Department of Revenue.
The July 2026 effective date may seem distant, but compliance systems don't build themselves, and the September 2027 penalty waiver window is narrower than many business owners realize.
This explainer is based on HB2711 as enacted. For detailed guidance specific to your business structure, consult a tax professional or the Washington Department of Revenue.