SB 5026
In CommitteeSenate
Motor vehicle sales tax
Dedicating the state sales tax on motor vehicles for transportation.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill increases dedicated transportation funding by gradually redirecting more of the state sales and use tax on vehicle transactions to a new account for highway, road, and bridge maintenance—starting in 2026 and reaching full dedication by 2031. It also updates how state investment earnings are allocated among state accounts.
- Increases the portion of state sales and use tax on vehicle sales and use that goes to transportation maintenance and preservation, phasing in from 16.66% in 2026 to 100% in 2031.
- Creates the 'transportation preservation and maintenance account' in the state treasury, into which the increased tax revenue must be deposited.
- Requires that money in the new account be spent only for preserving and maintaining highways, roads, and bridges.
- Continues to dedicate 0.3% of the general sales tax to performance audits of state government (as before), and keeps existing tax on car rentals (5.9%) going to multimodal transportation.
- Amends rules for how investment earnings from state treasury balances are distributed, prioritizing federal cash management requirements and banking costs before allocating earnings to state accounts—including the new transportation account—based on average daily balances.
Who is affected
- Vehicle buyers and lessees — People who buy or lease new or used motor vehicles in Washington (including private-party sales) will pay an increased portion of the state sales tax that is dedicated to transportation maintenance, with the share going up over time starting in 2026.
- Vehicle users (including out-of-state buyers) — People who use vehicles they already own (e.g., through registration or out-of-state purchases) may owe use tax on that vehicle, and a growing share of that tax will go to transportation maintenance starting in 2026.
- State transportation infrastructure programs — State transportation programs will receive increasing dedicated funding for highway, road, and bridge maintenance and preservation, starting in 2026.
- State agencies and trust funds — State agencies managing transportation and other trust funds will see changes in how investment earnings are distributed, with new rules for allocating interest income starting in 2026.
Pro/Con Analysis
Potential Benefits (5)
Dedicated, increasing funding for highway, road, and bridge *maintenance* (not expansion) will improve road safety and reduce long-term infrastructure failure risks—benefiting all drivers, especially those in rural or underserved areas where potholes and bridge deterioration disproportionately impact safety and access.
TransportationPeopleRef: Sec. 3; Sec. 1(4)(a)-(f); Sec. 2(6)(a)-(f)Excluding farm tractors/vehicles (unless used for marijuana production), off-road vehicles, and snowmobiles from the full tax increase may modestly limit environmental harm from non-road vehicle emissions in sensitive ecosystems—though this benefit is limited because most such vehicles are owned by wealthier recreational or agricultural users.
EnvironmentPeopleRef: Sec. 1(4)(g)(i)-(v); Sec. 2(6)(g)(i)-(v)The new transportation preservation and maintenance account ensures that transportation funds are legally restricted to road/bridge upkeep, reducing risk of political diversion of funds—this strengthens fiscal discipline and predictability for local agencies that depend on state road funding.
Local GovernmentPeopleRef: Sec. 4(4)(a); Sec. 5(4)(a)Allowing the treasury income account to cover banking costs (e.g., depository, safekeeping) improves operational efficiency and reduces administrative overhead—this benefits all state accounts, including those funding public services, by preserving more funds for program delivery.
FinancialLean peopleRef: Sec. 4(3); Sec. 5(3)The existing 5.9% car rental tax and 0.3% vehicle sales tax continue to fund multimodal transportation (transit, rail, bike/pedestrian), preserving current levels of investment in alternatives to driving—though not increased, this avoids regression in non-auto infrastructure.
TransportationPeopleRef: Sec. 1(2) (car rental tax to multimodal); Sec. 1(3)(a) (existing 0.3% to multimodal)
Potential Concerns (5)
Households purchasing or using vehicles will pay a progressively larger share of the state sales/use tax—rising from 16.66% in 2026 to 100% by 2031—on vehicle transactions, effectively increasing their transportation-related tax burden without offsetting rebates or exemptions for low- or middle-income users.
FinancialPeopleRef: Sec. 1(4)(a)-(f); Sec. 2(6)(a)-(f)Exemptions for farm vehicles, off-road vehicles, nonhighway vehicles, bicycles, and snowmobiles disproportionately benefit wealthier households—those more likely to own large farm equipment, RVs, or multiple vehicles—while offering little relief to average commuters.
FinancialPeopleRef: Sec. 1(4)(g)(i)-(v); Sec. 2(6)(g)(i)-(v)The reallocation of investment earnings based on average daily balances favors accounts with large balances (e.g., retirement funds, bond retirement accounts), which are dominated by high-net-worth individuals and institutional stakeholders, while reducing relative earnings for accounts with smaller balances—including general fund programs that support low-income services.
FinancialLean peopleRef: Sec. 4(4)(a); Sec. 5(4)(a)Maintaining the existing 0.16% dedicated to performance audits ensures oversight but does not expand accountability—this provision is neutral in impact, but the bill does not increase funding for audit capacity despite the major revenue shift, potentially weakening oversight of the new transportation account.
Public SafetyLean peopleRef: Sec. 1(5); RCW 43.09.470 (as referenced)While the bill increases funding for road/bridge *maintenance*, it does not increase overall transportation funding—and the shift away from multimodal transportation (bus, rail, bike/pedestrian infrastructure) may reduce transit access and affordability for low-income, elderly, and disabled residents who rely on alternatives to driving.
TransportationPeopleRef: Sec. 1(3)(a) (existing 0.3% to multimodal account); Sec. 1(2) (car rental tax to multimodal); Sec. 4(4)(a) (investment earnings reallocation)
Who Is Most Affected
Low- and middle-income vehicle owners and users will bear a larger share of the state sales/use tax on vehicles—up to 6.5% + 0.3% + up to 6.5% more (phased in) = up to ~13.3% total on vehicle purchases by 2031—without income-based relief, disproportionately affecting households already strained by transportation costs.
Rural and suburban residents who rely on personal vehicles will benefit from improved road and bridge maintenance, reducing vehicle damage and travel delays—but may see no benefit if multimodal alternatives remain underfunded.
Wealthy individuals and large fleet operators (e.g., trucking companies, rental agencies) benefit from the structure: exemptions for farm equipment and RVs, and investment earnings allocated by average daily balance—which favors large balances held by high-net-worth entities.
Local governments and state transportation agencies gain predictable, dedicated funding for road/bridge maintenance, improving infrastructure reliability—but may face pressure to prioritize roads over transit due to funding structure.
Transit-dependent populations (low-income, elderly, disabled) face no direct benefit from the bill—and may be harmed indirectly if multimodal funding stagnates while road funding grows, worsening access to jobs and services.