SB 5073
In CommitteeSenate
Motor vehicles sales tax use
Dedicating the sales tax on motor vehicles to highway uses.
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
Starting July 1, 2025, all sales and use taxes collected on vehicles in Washington—including private-party sales and out-of-state purchases used in the state—will be deposited into the motor vehicle fund and used exclusively for highway construction, maintenance, and preservation. This redirects previously shared revenue (some of which went to the general fund) entirely to transportation infrastructure.
- Starting July 1, 2025, all sales tax revenue from retail sales of vehicles (including private-party sales) is deposited into the motor vehicle fund, not the general fund.
- All use tax revenue from vehicle use in Washington (e.g., vehicles purchased out-of-state) is also deposited into the motor vehicle fund.
- The 0.3% motor vehicle sales tax (already in place) continues, but now all revenue from it is dedicated to the motor vehicle fund.
- The 0.5% car rental tax continues to go to the multimodal transportation account.
- Only highway purposes (as defined in RCW 46.68.130, including road preservation) can be funded with this money—no general fund use allowed.
- Exemptions remain for farm vehicles (except those used for marijuana production), off-road vehicles, nonhighway vehicles, bicycles, and snowmobiles.
Who is affected
- Vehicle buyers and sellers — People who buy or lease new or used vehicles (including private-party sales) in Washington will pay an additional 0.3% sales tax starting July 1, 2025, and all sales tax on vehicles (previously split between general fund and transportation accounts) will instead go directly to the motor vehicle fund for highway use.
- Out-of-state vehicle users — People who use vehicles they acquired out-of-state (e.g., through purchase or lease) in Washington will now pay use tax on those vehicles, with all such revenue going to the motor vehicle fund for highway purposes.
- State and local transportation agencies — State and local governments will receive increased dedicated funding for roads, bridges, and related transportation infrastructure, with specific allocations to counties, cities, ferries, and rural road programs.
- Farmers and agricultural businesses — Farmers and others who use farm tractors or farm vehicles for non-marijuana production will continue to be exempt from the motor vehicle sales tax, but those using such vehicles for marijuana production will pay the tax.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (4)
Dedicated $250M/year increase in highway preservation and maintenance funding improves road safety by reducing potholes, bridge deterioration, and crash risk—directly benefiting everyday commuters, cyclists, and pedestrians who depend on reliable infrastructure.
Public SafetyPeopleRef: Sec. 1(4)(a) & Sec. 2(6)(a)Increases dedicated state funding to counties and cities (totaling ~$120M/year) for road maintenance and improvements, helping smaller jurisdictions with limited tax capacity maintain local roads and reduce long-term infrastructure decay.
Local GovernmentPeopleRef: Sec. 3(2)(g) & (h)Exempts bicycles from the motor vehicle sales tax, lowering the cost of basic transportation for low- and middle-income residents who rely on bikes for commuting or errands—especially beneficial in urban and suburban areas with bike infrastructure.
Business & EmploymentPeopleRef: Sec. 1(4)(b)(iv) & Sec. 2(6)(b)(iv)Maintains farm vehicle exemption (except for marijuana production), preserving cost predictability for traditional agricultural operations—though the marijuana exclusion creates inequity and may burden small licensed growers.
Business & EmploymentPeopleRef: Sec. 1(4)(b)(i) & Sec. 2(6)(b)(i)
Potential Concerns (1)
All motor vehicle sales and use tax revenue (previously partially dedicated to the general fund) is now exclusively deposited into the motor vehicle fund, eliminating ~$250M/year from the state’s general fund—reducing flexibility to fund other essential services like K-12 education, behavioral health, and social services that many everyday Washingtonians rely on.
FinancialPeopleRef: Sec. 1(4)(a) & Sec. 2(6)(a)
Who Is Most Affected
Everyday vehicle buyers and users—especially low- and middle-income households—will pay an additional 0.3% sales tax on vehicles (already in place but now fully dedicated to transportation), and may face reduced public service funding in other areas due to the general fund reduction. However, they benefit significantly from improved road safety and maintenance. The net effect is modestly negative for those who drive older vehicles or rely heavily on personal transit.
Out-of-state vehicle buyers who use their vehicles in Washington will now pay use tax (previously undercollected), increasing their out-of-pocket cost. This is regressive for lower-income residents who may have purchased cheaper used vehicles out-of-state to avoid high local prices. The benefit is minimal—only improved road conditions, which they share with all residents.
State and local transportation agencies (WSDOT, counties, cities) gain predictable, increased funding for road and bridge preservation—reducing deferred maintenance backlogs and improving long-term infrastructure sustainability. Rural and smaller jurisdictions benefit disproportionately due to formula-based allocations.
Farmers using vehicles for traditional agriculture benefit from the exemption, but those in cannabis production lose it—creating a policy-driven inequity. The exemption is modest in dollar terms for most farms, but meaningful for small-scale operations. The marijuana exclusion disproportionately impacts small licensed growers who operate on thin margins.
Low- and middle-income households who rely on public services (education, housing, health) may face reduced service quality or funding over time due to the $250M/year shift from the general fund to a dedicated transportation fund. This is an indirect but significant cost borne most by communities already facing resource constraints.