Washington's Luxury Taxes Come Out to $3,840 on a $150,000 Car, $750 on the Boat, and Zero on the Plane

Buy a $150,000 car in Washington today and the luxury motor vehicle tax is $3,840: 8% of the $48,000 above the $102,000 the state exempts for purchases from July 1, 2026 through June 30, 2027. Spend the same $150,000 on a boat and the luxury layer is $750, because the recreational vessel tax is 0.5% of the whole selling price with no exempt amount. Spend it on an airplane and the luxury layer is nothing: the 10% tax on noncommercial aircraft above $500,000 was repealed before its April 1, 2026 start date. One 2025 transportation act, ESSB 5801 (Chapter 417, Laws of 2025), created all three taxes, and within a year they had three different fates.

The 8% car tax sits on a sales tax that already ranks third in the nation

The luxury motor vehicle tax applies to sales and leases of new and used vehicles from January 1, 2026; on a lease, the 8% is measured against the fair market value above the exempt amount at the lease's inception. The exempt amount runs on the state's fiscal year: $100,000 for purchases through June 30, 2026, then a 2% increase every July 1 — $102,000 now, $104,040 from July 1, 2027.

The 8% stacks on everything a car buyer already pays. Washington's state retail sales tax is 6.5%, local rates average 3.01% on top of it (the third-highest combined rate in the country as of January 1, 2026), and a separate motor vehicle sales/use add-on rose from 0.3% to 0.5% on the same January 1 the luxury tax arrived. At the register, the $150,000 car:

The local line is the statewide average; the rate at your address, from the DOR's lookup tool, is what a dealer will charge. Seattle sits above that average, rural counties below it.

The carve-outs have dates on them. Commercial vehicles, farm equipment, off-road vehicles, snowmobiles, and vehicles over 10,000 pounds (motor homes excepted) are outside the tax entirely, as are sales to tribal members in Indian Country. Out-of-state buyers owed the tax for its first six months; the nonresident exemption began July 1, 2026. Recreational vehicles are exempt only from July 1 through December 31, 2026: a $200,000 motor coach bought in the spring owed the tax, one bought this fall does not, and one bought after January 1, 2027 will owe it again.

The boat tax starts at the first dollar, and the plane tax never had one

Watercraft got a different design. Since July 1, 2026, each retail sale of a recreational vessel carries an additional 0.5% tax collected by Washington dealers, or by the Department of Licensing at registration when the boat was bought out of state. The statute sets the base at "the selling price, plus trade-in property of like kind", so trading in last year's boat reduces the sales tax but never the vessel tax. There is no threshold: a $250,000 boat owes $1,250, a $60,000 boat owes $300, and a $60,000 car owes no luxury tax at all.

The aircraft tax is the one that vanished. ESSB 5801 wrote it into chapter 82.48A RCW at 10% of a noncommercial aircraft's value above $500,000, effective April 1, 2026. ESHB 2711 (Chapter 255, Laws of 2026) repealed the chapter before that date, in §408 of the same act that retuned the car and boat taxes. The three levies now share a nickname and nothing else: one taxes the excess over a moving line, one taxes the first dollar, one no longer exists.

Across the river, the same car owes $750

Oregon has no general sales or transaction tax. What it does have is a 0.5% vehicle privilege tax on dealer sales of vehicles with 7,500 miles or fewer on the odometer, which dealers may pass to the buyer: $750 on the $150,000 car, and nothing at all if the car is used. Against Washington's $18,855 at the average local rate, the border is worth about $18,100 on this one purchase.

The mirror image is the paycheck. Oregon's top personal income tax rate is 9.90% in 2026; the rate our 2026 tables print for Washington wage income is 0.00%. Which side of the Columbia is cheaper depends on whether the money is being earned or spent, and neither state's headline number settles that by itself.

2025 stacked the taxes, and 2026 trimmed the stack

The luxury trio was one piece of a larger 2025 build-out, and the 2026 session spent as much effort undoing it as extending it.

The capital gains tax grew a second tier. RCW 82.87.040 now imposes 7% on long-term gains above the standard deduction plus 2.9% on taxable gains past $1,000,000 — a 9.9% top rate, added by Chapter 421, Laws of 2025, starting with 2025 gains. The deduction is $278,000 for 2025 gains, the ones reported on returns filed in 2026 ($270,000 for 2024). The Department of Revenue has not yet published the inflation-adjusted deduction for gains realized in 2026, so any 2026 threshold you see is pending, ours included.

The estate tax went up and came halfway back. For deaths on or after July 1, 2025, the exclusion rose from $2,193,000 to $3,000,000 and the top rate on the portion above $9 million rose from 20% to 35%. SB 6347 (Chapter 209, Laws of 2026), signed March 24, 2026 and titled "Undoing certain changes to the estate tax," put the top rate back at 20% for deaths on or after July 1, 2026. The exclusion runs $3,076,000 for deaths in the first half of 2026 and $3,000,000 from July 1, and DOR notes the statute's inflation reference has expired, so it is no longer set to rise.

The income tax arrived on a delay. SB 6346 (Chapter 238, Laws of 2026), signed March 30, 2026, imposes 9.9% on individual adjusted gross income above $1,000,000 starting January 1, 2028, with first returns due in 2029. Spouses and domestic partners share a single $1,000,000 deduction whether they file jointly or separately. The same act schedules sales tax exemptions for diapers, over-the-counter drugs, and hygiene products beginning January 1, 2029.

Around all of this sits the older stack: a real estate excise tax grading from 1.10% below $525,000 of sale price to 3.00% above $3,025,000 before local rates are added, and the B&O tax, a gross-receipts levy with more than 50 classifications that prices a business's revenue rather than its profit.

November could unwind more of it than 2026 did. Initiative Measure No. IP26-645 is certified to the 2026 general election ballot; per the Attorney General's ballot title, it would repeal the 9.9% millionaires tax and prohibit taxes on individual income, defining income as "any gain or benefit measured in money derived from an individual's capital, labor, property, or other source" and defining "individual" as a natural person for purposes of excise taxes. Until voters decide, the millionaires tax is enacted law that has never collected a dollar.

Three of the next moves already have dates

The schedule is printed. On January 1, 2027, the RV exemption lapses and motor coaches rejoin the 8% tax. On July 1, 2027, the car tax's exempt amount steps to $104,040. And on January 1, 2028, the 9.9% tax on income above $1 million takes effect — unless the November vote repeals it, the way ESHB 2711 caught the aircraft tax before its first day.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.