Nonresidents' rental vehicles

From the 2024 DOR Tax Exemption Study

82.08.0279 - Nonresidents' rental vehicles Description Renting or leasing motor vehicles and trailers to nonresidents for exclusive use in interstate commerce is exempt from sales tax. Nonresidents with places of business both inside and outside of Washington qualify for the exemption if the vehicle is registered and most frequently dispatched, garaged and serviced at a location outside of Washington. The exemption includes vehicles or trailers registered in a different state and have incidental use to transport persons or property between Washington locations. Purpose To relieve lessors of responsibility for collecting sales tax on the in-state use of rental cars, motor vehicles and trailers by a nonresident motor carrier engaged in interstate commerce and to encourage such businesses to rent or lease in Washington. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $0.168 $0.175 $0.181 $0.187 Local Taxes $0.048 $0.050 $0.052 $0.053 Repeal of Repealing this exemption would not increase revenues. The motor vehicle leases exemption and rentals would still qualify under the interstate commerce vehicles exemption. Potential ($ in millions): revenue gains FY