State Legislature Moving Fast on Adding "10% Luxury Tax" to Boat Sales Over $500,000

This past Thursday, the Washington State Senate introduced additional language, buried in an existing transportation bill (SB 5801), authorizing a 10 percent luxury vessel tax on new and used boat sales over $500,000, in addition to sales, use and watercraft excise tax. For example, if a boat is sold for $600,000 the luxury vessel tax will apply to the $100,000 exceeding the $500,000 threshold.  This bill is to tax what they deem as "the wealthy." In essence, however they are hurting the peripheral workers in the industry, such as detailers, mechanics, dock staff, boat yards, etc. Our Northwest Yacht Brokers Association lobbyist Jim Hedrick has a detailed explanation of this bill below. This vessel luxury tax language was added to the bill at the last minute - minimizing our ability to fight the details. The Senate has already passed the bill (30 yays - 18 nays) and the bill is reverting back to the House.  *** CALL TO ACTION: The House Transportation Committee will take this up on Monday, March 31 - Please call ASAP. * Call these key Transportation Budget members: Rep. Jake Fey (D-Tacoma), House Transportation Committee Chair: 360-786-7974 Rep. Julia Reed (D-Seattle), House Transportation Committee Vice Chair, 360-786-7814 (Julia is also chair the maritime caucus (House and Senate) and would be a key ally in budget negotiations.) Rep. Adam Bernbaum (D-Olympic Peninsula) 360-786-7916 Rep. Andrew Barkis (R-Olympia), long-time ranking member, House Transportation  360-786-7824 Rep. Sam Low (R-Snohomish), assistant ranking member, House Transportation 360-786-7967 * Message: "This tax will dramatically effect working class people - boatbuilders, boatyard workers, boat detailers, mechanics, service facilities, boat brokers and the many unique small businesses that make up the vibrant Washington recreational boating community. While it may be 'aimed' at the wealthy, it will have a disproportionate affect on the working class recreational maritime community." * Process: Call - Leave a Message - Repeat for all Key Transportation Members. *** Your help is vital in this last minute attempt to defeat this short-sighted action that will financially hurt many workers in our industry that they are not considering. Thank you for taking the time to make your voice heard. Sincerely, Paul Groesbeck NYBA Board President Kevin Blake NYBA Board Member - Chairman of Government Affairs

From NYBA Lobbyist, Jim Hedrick:

Thursday evening the Senate Transportation budget marked up their revenue bill, SB 5801, with the language below authorizing a luxury vessel tax, in addition to sales, use, and the watercraft excise tax upon new or previously owned recreational vessels with a selling price in excess of $500,000. (See Below)

SSB 5801 Section 217(2), page 21.
(2) In addition to taxes required under chapters 82.08, 82.12, and 82.49 RCW, there is levied and collected an additional 10 percent luxury vessel tax on the sale of a recreational vessel if: 
(a) The selling price of the recreational vessel exceeds $500,000; or 
(b) In the case of a lease requiring periodic payments, the fair market value of the recreational vessel exceeds $500,000 at the inception of the lease. 
(c) The additional tax imposed in this subsection only applies to the portion of the selling price in excess of $500,000, or in the case of a lease requiring periodic payments, the fair market value of the recreational vessel in excess of $500,000 at the inception of the lease. 
 
Link to SSB 5801:
https://lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bills/Senate%20Bills/5801-S.pdf?q=20250328221446  

Context:
The legislature is facing a $1 billion transportation budget shortfall and is seeking new revenue this session including a 6-cent a gallon (Senate) and 9-cent a gallon (House) gas tax increase that in future years would be indexed and automatically increase linked to inflation (CPI). Among several other tax increase proposal there is a luxury car tax that is a part of the original Senate Transportation revenue package (SB5801) at 10% on sales of motor vehicles in excess of $100,000. The luxury boat tax is a surprise but mirrors the luxury car tax with the 10% rate and sales price threshold. This legislature has made a point this session to single out high grossing companies with a proposed Payroll Tax (Senate) and a new Wealth Tax (House and Senate) on high-wage earners. The luxury tax on motor vehicles, yachts, and recreational air craft all fit into this political narrative.  

Process
SSB 5801 will be put to a vote of the full Senate TODAY Saturday (3/29) along with the Senate Transportation budget bill, SB 5161. The House will take up their transportation budget bill on Monday (3/31) and put both the budget and revenue bills in dispute; this kicks off the conference committee and budget negotiations. Once there is agreement, if there’s an agreement,  on budget and taxes, they will vote to advance the transportation revenue bills.  The budget negotiations should take a week, probably 2 weeks but the time to make your position known is NOW. Due to the fact the luxury boat tax was added by a late amendment and after the public hearing process, NYBA will have NO OPPORTUNITY to testify and state your opposition and give lawmakers the rationale as to why the luxury tax will not work. The legislature is set to adjourn on April 27.
 
Politics
I think there is very little room to maneuver on this issue. Having said that, I would focus contacts on House legislators on the Transportation Committee. Below are targets for the budget negotiations AND a list of all the members on the committee.

Potential Messages:

• Washington boating industry has no tax incentives for buyers and is limited by lack of moorage space and an already unfavorable tax climate for vessel sales, please don’t make it worse.
• The negative impact luxury taxes does not fall on consumers who will delay purchasing a boat. The negative impact falls on boat brokers and other small businesses that will be hurt by the lack of boat sales. These small businesses provide people with great jobs and also invest in their communities. 
• Luxury tax on boats has failed in many other countries and states due to decreased sales, lost employment, and the artificial price cap it places on product to avoid the tax.  

Transportation Budget Targets:

• Rep. Jake Fey (D-Tacoma), House Transportation Committee Chair: 360-786-7974
• Rep. Julia Reed (D-Seattle), House Transportation Committee Vice Chair,
  360-786-7814 (Julia is also chair the maritime caucus (House and Senate) and would be a key ally in budget negotiations.)
• Rep. Adam Bernbaum (D-Olympic Peninsula) 360-786-7916
• Rep. Andrew Barkis (R-Olympia), long-time ranking member, House Transportation  360-786-7824
• Rep. Sam Low (R-Snohomish), assistant ranking member, House Transportation
  360-786-7967

Full list of Transportation Committee Members can be found here (click on the dropdown menu that says "Committee members and staff" for full contact list.