In early June, NYBA's lobbyist Jim Hedrick reached out to the Department of Revenue to clarify language that appeared in this year's session, in ESHB 2711. DOR confirmed in their response that the change in language in ESHB did not amount to any change in the intent of the .5% recreational vessel tax that passed during the 2025 session. Rather, it was intended to streamline the the administration of the existing 0.5% recreational vessel tax by aligning its application with the retail sales and use tax framework.

One important reminder regarding this tax: It is NOT a sales tax, and thus any trade-in value is not deductible. The .5% applies to the entire sales price.

Below is the response from the Department of Revenue, to Jim's inquiry:

"The changes made in ESHB 2711 were not intended to create a new tax obligation or increase the tax imposed on recreational vessels. Rather, the amendments were intended to clarify the administration of the existing 0.5% recreational vessel tax by aligning its application with the retail sales and use tax framework.

Although the bill removed the corresponding use tax and lease language from the recreational vessel tax statute, the use tax continues to apply through the retail sales and use tax structure. As a result, a separate use tax provision is not necessary because the recreational vessel tax follows the same taxable event as the underlying retail sales or use tax.

Regarding trade-ins, there is an important distinction between the retail sales tax measure and the recreational vessel tax measure. Under the retail sales tax statutes, the selling price generally allows a deduction for qualifying trade-in property. Therefore, the value of a qualifying trade-in reduces the measure subject to retail sales tax.

For purposes of the recreational vessel tax, the trade-in value is not deductible. While the tax is calculated alongside the retail sales tax, the recreational vessel tax statute requires the trade-in amount to be added back into the measure. As a result, the trade-in deduction applies to the retail sales tax calculation, but not to the 0.5% recreational vessel tax.

The removal of the lease language and other revisions were intended to clarify that the recreational vessel tax is not a separate and distinct tax with its own independent preferences and rules. Instead, it functions as an additional surcharge administered through the retail sales and use tax system, allowing applicable sales and use tax rules and preferences to align, except where the recreational vessel tax statute specifically provides otherwise, such as the treatment of trade-in value.

If your client has questions about their specific tax liability, they can email in for a binding ruling using the Rulings@dor.wa.gov email address.