ESHB 2711

The bill significantly increases the motor vehicle fuel tax to 23 cents per gallon (up from 20.2 cents in 2025) and adds automatic 2% annual increases starting in 2026, plus new taxes on car rentals (11.9% in 2026), peer-to-peer car sharing (5%), and recreational vessels (5%); these are user fees tied to vehicle use and purchases, meaning drivers and vehicle owners—especially those with higher vehicle miles traveled or more expensive vehicles—bear the majority of the cost. While the fuel tax is technically usage-based, the regressive nature of fuel consumption (e.g., low-income households spend a higher share of income on fuel) means the burden falls disproportionately on everyday people, particularly those in rural areas with limited transit alternatives.

The bill imposes an 8% luxury tax on motor vehicles and recreational vessels priced over $100,000 (adjusted annually for inflation) and a 10% luxury tax on aircraft over $500,000. These thresholds—$100,000 for vehicles and $500,000 for aircraft—fall well above median household income ($85,000 in WA) and median home value ($550,000), meaning only the top 5–10% of income and wealth households will be subject to these taxes. The revenue is dedicated to multimodal transportation, but the tax itself is highly concentrated among high-net-worth individuals and business owners of luxury assets.

The $5-per-tire fee on new replacement tires is collected from all consumers purchasing tires, regardless of income. While the fee is modest ($20 for a full set), it is regressive in effect—low-income households that must replace tires more frequently (e.g., due to poor road conditions or older vehicles) will bear a higher relative burden. Tire retailers must collect and remit the fee, adding administrative cost, but the fee is not income-targeted or means-tested.

While the bill increases overall transportation funding and maintains existing allocations for cities, counties, ferries, and rural roads, the shift toward multimodal projects (e.g., transit, bike lanes, EV infrastructure) may reduce funding for traditional highway maintenance—especially in rural areas where road conditions are already poor. Some local governments, particularly in rural counties, may see less benefit if their transportation needs are dominated by road repair rather than multimodal expansion.

Car rental companies and peer-to-peer car sharing platforms face new taxes (11.9% in 2026, falling to 9.9% in 2027, plus 5% on peer-to-peer), which may reduce profitability or lead to higher rental prices. However, the bill explicitly excludes commercial fleet vehicles used for business purposes (e.g., delivery trucks), and the tax does not apply to vehicles over 10,000 lbs (e.g., large trucks), so the impact is concentrated on consumer-facing rental and sharing businesses—many of which are small or mid-sized operators. The effect on employment is likely modest, as demand for car sharing is elastic and may shift to alternatives.