Retail Sales and Use Tax.
Retail sales taxes are imposed on retail sales of most articles of tangible personal property, digital products, and some services. A retail sale is a sale to the final consumer or end user of the property, digital product, or service. If retail sales taxes were not collected when the user acquired the property, digital products, or services, then use tax applies to the value of property, digital product, or service when used in this state. The state, all counties, and all cities levy retail sales and use taxes. The state sales and use tax rate is 6.5 percent; local sales and use tax rates vary from 0.5 percent to 3.9 percent, depending on the location.
Electric bicycles are two or three-wheeled cycles with a saddle, fully operative pedals for human propulsion, and an electric motor. The electric motor must have a power output of no more than 750 watts. There are three classes of electric bicycles in state law:
There are various restrictions on the operation location of electric bicycles according to class.
Tax Preference Performance Statement.
State law provides for a range of tax preferences that confer reduced tax liability upon a designated class of taxpayer. Tax preferences include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits. Currently, Washington has over 650 tax preferences, including a variety of sales and use tax exemptions. Legislation that establishes or expands a tax preference must include a Tax Preference Performance Statement (TPPS) that identifies the public policy objective of the preference, as well as specific metrics that the Joint Legislative Audit and Review Committee (JLARC) can use to evaluate the effectiveness of the preference. All new tax preferences automatically expire after 10 years unless an alternative expiration date is provided.
Sales of new electric bicycles and up to $200 in related cycling equipment are exempt from the sales and use tax. The exemption expires on the earlier of:
Related cycling equipment includes accessories commonly associated with bicycle ownership, such as helmets, bicycle locks, fenders, and lights, when purchased as part of the same transaction as an electric bicycle.
The Department of Revenue (DOR) must post quarterly balance reports on their website that include an estimated expiration date for the exemption. If the remaining balance of the exemptions available is less than $10,000, the DOR must publish a notification on its website. The DOR must also provide written notice of the expiration of the exemption to various parties.
A TPPS is provided identifying the tax preference as one intended to provide direct tax relief and to encourage citizens to own and use electric bicycles. The JLARC is directed review the number of electric bicycles purchased in Washington. If the amount of electric bicycle purchases increases by 25 percent compared to the number of purchases made in calendar year 2020, the Legislature intends to extend the expiration date of the preference.
For purposes of JLARC review, the substitute bill changes the comparison year for electric bike purchases from 2020 to 2019. A variety of other technical changes are made, including alignment of the effective date of the use tax exemption with that of the sales tax exemption. The substitute bill also adjusts the administrative expiration of the tax exemption dollar limit so that it may expire on the first day of the first month after the month in which the department determines the $500,000 cap has been met.
(In support) Electric bikes allow people to travel further with much more ease. These types of bikes function as a good replacement for a car in a way that regular bikes do not. There are huge health benefits to use of electric bikes as well, including mental health. Reducing barriers to electric bikes is a climate friendly approach to transportation improvement and reduction in traffic congestion.