TAX ON THE BANKING AND SALE OF SURPLUS ZEV CREDITS

RCW 82.17
in effect

RCW 82.17.010 Definitions.

The definitions in this section apply throughout this chapter unless the context clearly requires otherwise. (1) "Banked" means a ZEV credit that a manufacturer has carried over for use in future model years in which a manufacturer has a shortfall or for use to offset a manufacturer's deficit carried over from a previous model year. (2) "Manufacturer" has the same meaning as in WAC 173-423-040, as it existed as of January 1, 2025. (3) "Model year" has the same meaning as in WAC 173-423-040, as it existed as of January 1, 2025. (4) "Pooled" means a ZEV credit that has been earned in Washington and transferred to another state that implements a program for zero-emission vehicles that is consistent with California motor vehicle emissions standards and 42 U.S.C. Sec. 7507 (section 177 of the federal clean air act). (5) "Surplus" means when a manufacturer's zero-emission vehicle requirement performance is above the applicable annual zero-emission vehicle requirement, as calculated under the zero-emission vehicle program rules adopted by the department of ecology. (6)(a) "Zero-emission vehicle program" means a rule adopted by the department of ecology under chapter 70A.30 RCW that requires manufacturers to deliver a minimum percentage of zero-emission vehicles in or into Washington that is applicable to passenger cars, light duty trucks, and medium duty vehicles. "Zero-emission vehicle program" includes the rule adopted by the department of ecology codified in chapter 173-423 WAC, as it existed as of May 20, 2025, and any successor rules adopted by the department of ecology applicable to passenger cars, light duty trucks, and medium duty vehicles. (b) "Zero-emission vehicle program" does not include the advanced clean trucks rule adopted by the department of ecology under chapter 70A.30 RCW or other successor rules adopted by the department under chapter 70A.30 RCW applicable to heavy duty vehicles. (7) "Zero-emission vehicle requirement" means a manufacturer's zero-emission vehicle production required, expressed in whole vehicles, for the applicable model year under the zero-emission vehicle program. (8) "ZEV credit" means a unit of measure generated when a manufacturer delivers a zero-emission vehicle or qualifying plug-in hybrid vehicle for sale in Washington or undertakes other activities specified in rules adopted by the department of ecology to implement chapter 70A.30 RCW. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise. (1) "Banked" means a ZEV credit that a manufacturer has carried over for use in future model years in which a manufacturer has a shortfall or for use to offset a manufacturer's deficit carried over from a previous model year. (2) "Manufacturer" has the same meaning as in WAC 173-423-040, as it existed as of January 1, 2025. (3) "Model year" has the same meaning as in WAC 173-423-040, as it existed as of January 1, 2025. (4) "Pooled" means a ZEV credit that has been earned in Washington and transferred to another state that implements a program for zero-emission vehicles that is consistent with California motor vehicle emissions standards and 42 U.S.C. Sec. 7507 (section 177 of the federal clean air act). (5) "Surplus" means when a manufacturer's zero-emission vehicle requirement performance is above the applicable annual zero-emission vehicle requirement, as calculated under the zero-emission vehicle program rules adopted by the department of ecology. (6)(a) "Zero-emission vehicle program" means a rule adopted by the department of ecology under chapter 70A.30 RCW that requires manufacturers to deliver a minimum percentage of zero-emission vehicles in or into Washington that is applicable to passenger cars, light duty trucks, and medium duty vehicles. "Zero-emission vehicle program" includes the rule adopted by the department of ecology codified in chapter 173-423 WAC, as it existed as of May 20, 2025, and any successor rules adopted by the department of ecology applicable to passenger cars, light duty trucks, and medium duty vehicles. (b) "Zero-emission vehicle program" does not include the advanced clean trucks rule adopted by the department of ecology under chapter 70A.30 RCW or other successor rules adopted by the department under chapter 70A.30 RCW applicable to heavy duty vehicles. (7) "Zero-emission vehicle requirement" means a manufacturer's zero-emission vehicle production required, expressed in whole vehicles, for the applicable model year under the zero-emission vehicle program. (8) "ZEV credit" means a unit of measure generated when a manufacturer delivers a zero-emission vehicle or qualifying plug-in hybrid vehicle for sale in Washington or undertakes other activities specified in rules adopted by the department of ecology to implement chapter 70A.30 RCW.

RCW 82.17.020 Information related to manufacturer's zero-emission vehicle program activities — Transmission to department.

(1) By October 31st of each year, the department of ecology must transmit to the department the following information related to each manufacturer's zero-emission vehicle program activities during the preceding model year, using information reported to the department of ecology under chapter 70A.30 RCW: (a) Beginning with implementation of the zero-emission vehicle program for purposes of model year 2024, the number of surplus ZEV credits banked by each manufacturer for use in complying with the requirements of the zero-emission vehicle program during a future model year, and the model year of each banked credit. The information reported under this subsection (1)(a) must include any banked ZEV credits that were generated prior to model year 2024 that continued to be banked during implementation of the program in model year 2024 and in subsequent model years; and (b) Beginning with implementation of the zero-emission vehicle program for purposes of model year 2024, for each purchase or sale of zero-emission vehicle credits by the manufacturer: (i) The date of the purchase or sale; (ii) The identity of the other manufacturer involved in the purchase or sale transaction; (iii) The volume of zero-emission vehicle credits included in the purchase or sale; and (iv) The model year of the credits purchased or sold. (2) Beginning with implementation of the zero-emission vehicle program for purposes of model year 2024, each manufacturer must record and report to the department, in a form and manner prescribed by the department, the price, per credit and in total, of the zero-emission vehicle credits included in transactions specified in subsection (1)(b) of this section and in such a way that it identifies the specific transaction reported by the department of ecology to the department. A manufacturer that sold credits associated with model year 2023 vehicles prior to May 20, 2025, must report to the department the price per credit, and number of such credits sold, at the same time that it is required to report any sales of model year 2024 credits. Manufacturers must report the information required under this subsection by October 31st for the previous model year of the zero-emission vehicle program. (3) Unaggregated information pertaining to the price of zero-emission vehicle credits in an individual zero-emission vehicle credit transaction is financial, commercial, and proprietary information exempt from public disclosure under chapter 42.56 RCW. Information related to the price of zero-emission vehicle credits in an individual zero-emission vehicle credit transaction under subsection (2) of this section must be aggregated by a time period no more frequent than the calendar quarter in which the transaction occurred, and in a manner that does not disclose the price of a ZEV credit in a specific transaction. (1) By October 31st of each year, the department of ecology must transmit to the department the following information related to each manufacturer's zero-emission vehicle program activities during the preceding model year, using information reported to the department of ecology under chapter 70A.30 RCW: (a) Beginning with implementation of the zero-emission vehicle program for purposes of model year 2024, the number of surplus ZEV credits banked by each manufacturer for use in complying with the requirements of the zero-emission vehicle program during a future model year, and the model year of each banked credit. The information reported under this subsection (1)(a) must include any banked ZEV credits that were generated prior to model year 2024 that continued to be banked during implementation of the program in model year 2024 and in subsequent model years; and (b) Beginning with implementation of the zero-emission vehicle program for purposes of model year 2024, for each purchase or sale of zero-emission vehicle credits by the manufacturer: (i) The date of the purchase or sale; (ii) The identity of the other manufacturer involved in the purchase or sale transaction; (iii) The volume of zero-emission vehicle credits included in the purchase or sale; and (iv) The model year of the credits purchased or sold. (2) Beginning with implementation of the zero-emission vehicle program for purposes of model year 2024, each manufacturer must record and report to the department, in a form and manner prescribed by the department, the price, per credit and in total, of the zero-emission vehicle credits included in transactions specified in subsection (1)(b) of this section and in such a way that it identifies the specific transaction reported by the department of ecology to the department. A manufacturer that sold credits associated with model year 2023 vehicles prior to May 20, 2025, must report to the department the price per credit, and number of such credits sold, at the same time that it is required to report any sales of model year 2024 credits. Manufacturers must report the information required under this subsection by October 31st for the previous model year of the zero-emission vehicle program. (3) Unaggregated information pertaining to the price of zero-emission vehicle credits in an individual zero-emission vehicle credit transaction is financial, commercial, and proprietary information exempt from public disclosure under chapter 42.56 RCW. Information related to the price of zero-emission vehicle credits in an individual zero-emission vehicle credit transaction under subsection (2) of this section must be aggregated by a time period no more frequent than the calendar quarter in which the transaction occurred, and in a manner that does not disclose the price of a ZEV credit in a specific transaction.

RCW 82.17.030 Tax on the banking and sale of surplus ZEV credits — Penalties and interest.

*** CHANGE IN 2026 *** (SEE 2251-S2.SL ) *** (1) Beginning May 20, 2025, for purposes of model year 2024 program implementation, an excise tax is imposed on the banking and sale of surplus ZEV credits as verified by the department of ecology for each model year. The excise tax imposed under this section does not apply to pooled surplus ZEV credits. (a) For a ZEV credit sold to another manufacturer, the amount of the tax with respect to such sale is equal to the credit sales price reported under RCW 82.17.020 multiplied by a rate of two percent. (b) For a ZEV credit banked by a manufacturer, and thus considered sold under this chapter, the amount of tax with respect to the privilege of holding a banked ZEV credit for use in a future model year is equal to the average ZEV credit price calculated by the department under subsection (3) of this section, multiplied by the rate of 10 percent. For purposes of the tax imposed under this chapter, a banked ZEV credit held at the start of the next model year is considered sold. (2) For each year of zero-emission vehicle program implementation that a ZEV credit is banked or continues to be banked, the manufacturer must pay the tax specified in subsection (1)(b) of this section. The tax in subsection (1)(b) of this section applies to banked credits that were generated prior to model year 2024 that continue to be banked during implementation of the program for purposes of model year 2024 or subsequent model years. (3) Based on the ZEV credit sales prices reported to the department under RCW 82.17.020 : (a) For each model year, the department must calculate the average ZEV credit price and share this information with the department of ecology for publication. The average ZEV credit price for a model year must be calculated by aggregating the reported sales prices of ZEV credits under RCW 82.17.020 by all manufacturers that reported transactions for the model year. If there were no transactions of ZEV credits reported to the department for a specific model year, the department must apply the average ZEV credit price for the most recent model year for which such data are available for purposes of that specific model year. (b) Beginning November 1, 2026, and each year thereafter, the department must calculate the amount of the tax by each manufacturer due under this section. The department must notify the manufacturer of their tax liability for the most recent reporting year no later than January 31st of the immediately following calendar year, except that the department may notify the manufacturer of their tax liability for both model year 2024 and model year 2025 no later than January 31, 2027. (c) Once the average ZEV credit price has been calculated and is published to the department of ecology's website, the amount is considered final and cannot be altered based on amended information received by the department from the department of ecology or a participating manufacturer. (4) Penalties and interest under chapter 82.32 RCW will apply to any tax liability not paid by the due date of the notice of tax liability under subsection (3) of this section. (5) The proceeds from the tax imposed under this chapter must be deposited as follows: (a) 30 percent to the electric vehicle incentive account created in RCW 43.330.365 ; (b)(i) Until June 30, 2027, 70 percent to the state general fund; and (ii) Beginning July 1, 2027, 70 percent to the carbon emissions reduction account created in RCW 70A.65.240 . (1) Beginning May 20, 2025, for purposes of model year 2024 program implementation, an excise tax is imposed on the banking and sale of surplus ZEV credits as verified by the department of ecology for each model year. The excise tax imposed under this section does not apply to pooled surplus ZEV credits. (a) For a ZEV credit sold to another manufacturer, the amount of the tax with respect to such sale is equal to the credit sales price reported under RCW 82.17.020 multiplied by a rate of two percent. (b) For a ZEV credit banked by a manufacturer, and thus considered sold under this chapter, the amount of tax with respect to the privilege of holding a banked ZEV credit for use in a future model year is equal to the average ZEV credit price calculated by the department under subsection (3) of this section, multiplied by the rate of 10 percent. For purposes of the tax imposed under this chapter, a banked ZEV credit held at the start of the next model year is considered sold. (2) For each year of zero-emission vehicle program implementation that a ZEV credit is banked or continues to be banked, the manufacturer must pay the tax specified in subsection (1)(b) of this section. The tax in subsection (1)(b) of this section applies to banked credits that were generated prior to model year 2024 that continue to be banked during implementation of the program for purposes of model year 2024 or subsequent model years. (3) Based on the ZEV credit sales prices reported to the department under RCW 82.17.020 : (a) For each model year, the department must calculate the average ZEV credit price and share this information with the department of ecology for publication. The average ZEV credit price for a model year must be calculated by aggregating the reported sales prices of ZEV credits under RCW 82.17.020 by all manufacturers that reported transactions for the model year. If there were no transactions of ZEV credits reported to the department for a specific model year, the department must apply the average ZEV credit price for the most recent model year for which such data are available for purposes of that specific model year. (b) Beginning November 1, 2026, and each year thereafter, the department must calculate the amount of the tax by each manufacturer due under this section. The department must notify the manufacturer of their tax liability for the most recent reporting year no later than January 31st of the immediately following calendar year, except that the department may notify the manufacturer of their tax liability for both model year 2024 and model year 2025 no later than January 31, 2027. (c) Once the average ZEV credit price has been calculated and is published to the department of ecology's website, the amount is considered final and cannot be altered based on amended information received by the department from the department of ecology or a participating manufacturer. (4) Penalties and interest under chapter 82.32 RCW will apply to any tax liability not paid by the due date of the notice of tax liability under subsection (3) of this section. (5) The proceeds from the tax imposed under this chapter must be deposited as follows: (a) 30 percent to the electric vehicle incentive account created in RCW 43.330.365 ; (b)(i) Until June 30, 2027, 70 percent to the state general fund; and (ii) Beginning July 1, 2027, 70 percent to the carbon emissions reduction account created in RCW 70A.65.240 .

RCW 82.17.040 Applicability of general administrative provisions — Rules.

(1) Except as otherwise provided by law and to the extent not inconsistent with the provisions of this chapter, chapter 82.32 RCW applies to the administration of taxes imposed under this chapter. (2) The department may adopt any rules it considers useful in administering the tax under this chapter. (1) Except as otherwise provided by law and to the extent not inconsistent with the provisions of this chapter, chapter 82.32 RCW applies to the administration of taxes imposed under this chapter. (2) The department may adopt any rules it considers useful in administering the tax under this chapter.

RCW 82.17.050 Application of tax to manufacturers that sell fewer than 25,000 vehicles.

The tax imposed under RCW 82.17.030 does not apply to a manufacturer that banks or sells credits associated with zero-emission vehicles or qualifying plug-in hybrid zero-emission vehicles in an amount below a total of 25,000 zero-emission vehicles or plug-in hybrid zero-emission vehicles that are banked or sold for a model year by the manufacturer. A manufacturer that banks or sells ZEV credits, in total, for a model year of zero-emission vehicle program implementation in an amount equal to or exceeding the ZEV credits associated with 25,000 zero-emission vehicles or plug-in hybrid zero-emission vehicles must pay the tax imposed under this chapter on each credit banked or sold by the manufacturer for that model year. The tax imposed under RCW 82.17.030 does not apply to a manufacturer that banks or sells credits associated with zero-emission vehicles or qualifying plug-in hybrid zero-emission vehicles in an amount below a total of 25,000 zero-emission vehicles or plug-in hybrid zero-emission vehicles that are banked or sold for a model year by the manufacturer. A manufacturer that banks or sells ZEV credits, in total, for a model year of zero-emission vehicle program implementation in an amount equal to or exceeding the ZEV credits associated with 25,000 zero-emission vehicles or plug-in hybrid zero-emission vehicles must pay the tax imposed under this chapter on each credit banked or sold by the manufacturer for that model year.
Source: WA Statutes (Official Site)URL: https://app.leg.wa.gov/RCW/default.aspx?cite=82.17&full=trueFetched: 6/29/2026