R1S Leasing guidance (Trade in for sales tax exemption - Washington State)

[craigwat]

Rivian doesn't know what they are talking about here. You can absolutely get the EV cap. cost reduction as well as the WA tax credit.

However, in your case you don't need to pay taxes on your lease at all, even if you didn't have any tax credits, because the sum of your lease payments is 1,568.34 * 24 = 37,640.16, which is less than 45,000. Any EV lease transaction where the sum of the lease payments is less than $45,000 is exempt from tax (https://www.dol.wa.gov/vehicles-and...ns-alternative-fuel-vehicles-and-plug-hybrids). Qualifying makes and models are at https://data.wa.gov/Transportation/...Eligibility-by-Make-Mo/aug9-4a7g/data_preview (and Rivian is included).

I'm being told my 2024 R1T lease (~42k total) does not qualify for the WA sales tax exemption. Any idea why the 2024 R1T is the only Rivian year/model that isn't on the list? Looks like all the R1S & 2023 R1T's qualify...

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[johnnyutah#9]

Has anyone successfully received a Washington state sales tax exemption on a R1S lease? If so, does that exemption show up on your monthly lease payments or did you have to go to a vehicle licensing office?

My guide told me it's based on the purchase price and of course, that exceeds $45K. Exact wording states:

• New vehicle transactions must not exceed $45,000 in purchase price or lease payments

 

[raisethe4]

I'm being told my 2024 R1T lease (~42k total) does not qualify for the WA sales tax exemption. Any idea why the 2024 R1T is the only Rivian year/model that isn't on the list? Looks like all the R1S & 2023 R1T's qualify...

I emailed WA DOT and the dataset owner. They replied that the list will be updated sometime mid April and will include the 2024 R1T.

I'm looking to lease in the very near future as well and would be interested following your experience with getting the tax exemption in WA state.

 

[DucRider]

Qualification is actually based on the fair market value - the total of lease payments only determines the amount of any sales tax exemption.

RCW 82.12.9999 Exemptions—Vehicles using clean alternative fuels and electric vehicles. (Expires August 1, 2028.)
(1) (iii)(A) Have a fair market value at the time use tax is imposed for purchased vehicles that:

(I) For a vehicle that is a new vehicle at the time of the purchase date or the date the lease agreement was signed, does not exceed $45,000;​

Only licensed WA Dealers can offer a Sales Tax exemption in the contract. If purchased from an out of State Dealer (Rivian sells to WA customers using their Illinois dealers license), the consumer must file for a refund:
https://dor.wa.gov/sites/default/files/2022-02/41-0122.pdf

Notice that 3 B requires the fair market value be entered.

 

[VSG]

What everybody is missing here is that the $45k limit is just part of the equation.
If your sales price/lease payments total more than $45k, then you get NO sales tax exemption.

But, if your sales price/lease payments total LESS than $45k, you are exempt from paying sales tax ONLY ON THE FIRST $25,000 OF THAT AMOUNT.

So a $40k car does NOT pay $0 in sales tax. It pays sales tax on $40k-$25k = $15k. So you will still pay >10% sales tax on that $15k. It's not $0, but it's way better than >10% of $45k.

 

[raisethe4]

What everybody is missing here is that the $45k limit is just part of the equation.
If your sales price/lease payments total more than $45k, then you get NO sales tax exemption.

But, if your sales price/lease payments total LESS than $45k, you are exempt from paying sales tax ONLY ON THE FIRST $25,000 OF THAT AMOUNT.

So a $40k car does NOT pay $0 in sales tax. It pays sales tax on $40k-$25k = $15k. So you will still pay >10% sales tax on that $15k. It's not $0, but it's way better than >10% of $45k.

Thanks for the clarification. So as long as your total lease payments are below $45k then you can claim the $25k exemption?

 

[VSG]

I'm not 100% how the leasing tax exemption works - when I looked into this in detail it was because I was purchasing. But yes, my reading is that as long as your total lease payments are below $45k you are exempt from state sales tax on the first $25k $15k of that amount (see below for correction).

If you call DOR, it's actually possible to quickly get through to someone and talk to them if you want to make sure about this. They also have a form you can use to get reimbursed from the state if the dealer/leasing company improperly charged you sales tax. You might have to do this if Rivian's leasing company doesn't know how to do this right.

https://dor.wa.gov/sites/default/files/2022-02/41-0122.pdf

Oh, and reading that form just now I realize gave you the wrong information. The exemption *used* to cover the first $25k when I did this, but that limit has been lowered over the past few years and for the current year is now only $15k. Still, that will save you over $1500 in taxes ...

 

[johnnyutah#9]

@VSG Thanks for doing the research! $1500 is worth filling out some paperwork.

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