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Proposed bill would exempt electric bikes from state sales taxes

Representative Sharon Shewmake, 42nd Legislative District

A bill introduced into the Washington House of Representatives by Representative Sharon Shewmake (D-Bellingham) would exempt electric bikes, and up to $200 in bike accessories, from state sales taxes. HB 1330 would not apply to non-electric bikes, using the definition of ebike in state law, “bicycle with two or three wheels, a saddle, fully operative pedals for human propulsion, and an electric motor. The electric-assisted bicycle’s electric motor must have a power output of no more than seven hundred fifty watts”.

On Twitter, Rep. Shewmake explained her reasoning for confining the legislation to ebikes:
“My thinking was e-bikes are emerging tech and a car replacement. Haul kids, handle hills, more groceries! We give tax breaks to EVs but not e-bikes which are cheaper, don’t take up as much space, use less electricity, are FUN and a LOT cheaper but still suffer from sticker shock.”

As written, the exemption would take effect on August 1st of this year, and expire in 2027 or if $500,000 in sales taxes have been waived under the provision, whichever comes first. However, there’s also a provision that signals the intent of the legislature to extend the exemption if it’s successful, specifically if sales of ebikes go up 25% or more compared to 2020 levels.

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Bike accessories that qualify for the exemption (up to $200) are defined as “cycling accessories commonly associated with bicycle ownership including, but not limited to, helmets, bicycle locks, fenders, lights, and a bicycle service or repair plan, purchased as part of the same transaction as an electric bicycle”.

This bill would be an easier pathway to providing a state-supported boost to ebike ownership than a frequently-discussed rebate program (which we should also be pursuing). The transportation package floated during the 2020 session actually included a special sales tax on bikes, which would match a similar fee passed in Oregon in 2017, but so far we’ve seen no indication that a transportation package in either legislative house will include a special bike tax.

To stand a chance getting through the legislature, the bill currently needs co-sponsors. Contact your local House members to ask them to add their name to HB 1330.

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23 responses to “Proposed bill would exempt electric bikes from state sales taxes”

  1. All bikes indeed should be sales tax exempt. This is a move in the right direction. As a shop owner I have always promoted that the bicycle industry should work together and not be in competition with each other to make these big idea’s more attainable. Invest in promoting development of municipal infrastructure for bicycles instead of research for product development.

  2. Skylar

    I have mixed feelings about this. On the one hand, it’s a great way to encourage lower-impact transportation than driving. On the other hand, it’s a giveaway to people who are wealthy enough to be able to afford an e-bike. I think I would have an easier time supporting it if the exemption were broadened to include sales tax on all bikes, up to some cap (say $1000 of value). It would be even better if we had an income tax, since it could just be a tax credit with some income cap.

    1. I think the intent is good, although I think it should:
      1) also apply to non-motorized bikes.
      2) Have a cap. A luxury e-bike that costs $5000-$10000 should not be tax exempt.
      3) Not apply to accessories beyond the bare minimum (e.g. helmet).

      The good news is that the prices of ebikes are going down to the point where they’re not just for the wealthy anymore. For everyday commuters, personal ownership of an e-bike is far, far cheaper than riding Like and Jump bikes.

  3. I like the idea and presume it’s oriented to encourage people to use an e-bike instead of a car for local transportation.

    The primary issue I have is: it isn’t enough of a discount to make e-bikes affordable if you already own a car. And, if you are trying to decide whether to buy an e-bike or a car, the price difference is big enough that 10% probably won’t have much influence.

    At first glance, it seems odd regular bikes should be included in the discount. Again, at 10%, it really doesn’t make much difference.

    But if there were a larger subsidy, encouraging people to buy an e-bike rather than a regular bike could have a huge effect. Here’s why. If you buy a regular bike and are lazy, you probably won’t ride it much. But if you can get an e-bike at a reasonable price, you just might. In other words, a subsidy for all kinds of bikes would simply result in more people buying bikes. But a subsidy for e-bikes could significantly increase ridership.

  4. Ron P

    I’m very pro bike, but I suspect most people who are buying ebikes are still pretty wealthy and this will mainly effectively be a regressive tax break benefiting the well off who don’t need it. I guess there will be some benefit in keeping some well off people from using their cars as much and from buying a few cars–but seems to be a not well thought out policy.

    1. NickS

      The easy solution to this is to put a cap on the cost of the e-bike that’s covered by the sales tax exemption, exactly what has been done for electric cars and applies to both new and used cars. Say, $1500. Rounding numbers to keep things simple, someone who wants to buy a $10,000 e-bike would save 10% on the first $1500; $150. Nice, but not exactly an enormous give away to the wealthy at 1.5% of the total cost. Whereas $100 off a $1,000 bike is a much more significant savings, proportionally.

      Here’s an overview of the sales tax exemptions for electric cars, for comparison sake — https://dor.wa.gov/content/clean-alternative-fuel-and-plug-hybrid-vehicles-salesuse-tax-exemptions.

      1. NoSpin

        Your version would still be giving a tax break to someone who clearly doesn’t need one, while siphoning off money from the state that clearly has bigger things to worry about (like Covid, unemployment, etc…)

        Shill all you want for the e-bike business – engaged cyclists clearly aren’t buying it.

  5. NoSpin

    Dumb idea. No one buys something – especially a niche product like an e-bike – because ‘there’s no sales tax.’ And when the product becomes mainstream and the Legislature tries to lift the tax exemption, buys and sellers alike scream ‘they’re increasing taxes!’

    WA suffers the most convoluted and regressive tax system in the nation exactly because it’s riddled with exemptions, carveouts, and set-asides.

    This idea is the antithesis of the broad tax reform WA needs. I’m not going to support it just because I cycle and am rapidly approaching the point at which I’ll need an e-bike myself.

    1. JP

      Wrong, NoSpin.
      There’s also no sales tax on solar panels and PV systems in general. The $1000 savings on a $10,000 system were certainly a deciding factor in my decision to purchase.

  6. Ballard Biker

    HB 1330 would not apply to non-electric bikes…

    Great, another bill written by motorized bicycles manufacturers and retailers and fast tracked through our legistlature that only benefits them and the wealthy people that buy motorized bicycles.

    Between this and the original bill that unleashed motorized bicycles onto our previously un-motorized, multi-modal infrastructure, we are just so blessed!

  7. AW

    The overall intent to promote use of other transport instead of cars for trips is positive. But this seems like a very simplistic approach and not really something that will make a difference. As others have noted an ebike is a luxury item and a 10% discount (or 10% additional profit by the dealer) is not going to change behavior much. If I can’t afford a $1000 ebike then probably can’t afford a $900 bike either. And most people who can afford the $1000 ebike will get it anyway and keep it in the garage next to their car.

    The most fundamental problem that keeps people in their cars and not on their bike is that it isn’t safe to ride their bike to school, work or the grocery store. Solve this problem and then people will use their bikes and ebikes.

    If the state does want to spend money (and that is what this is) to promote ebike use instead of cars then there are better ways to do it:

    * Subsidize bikes for people who commit to using it to commute to school or work. Perhaps place a cap on income so the money is not used up by high paid tech workers.

    * Subsidize bikeshare for areas with a good bike network but not enough density to make bikeshare profitable.

    * Create a program of regularly scheduled bike trains so new riders can feel comfortable starting out.

    * And do not discriminate against non motorized bikes. Some people don’t need or want to have the motor. A lot more non ebikes can be subsidized than ebikes.

    Is there some idea on the cost of forgoing the sales tax on ebikes ? Perhaps this is enough money to make a down payment on making the road safe for bicycle riders.

    1. Ballard Biker

      Is there some idea on the cost of forgoing the sales tax on ebikes ?

      Lobbying by ebike manufacturers and/or retailers is the only logical reason why this would only include bikes with motors.

      1. NoSpin

        From the article (and the legislation itself), the tax exemption will expire in 2027 or if $500,000 in sales taxes have been waived, whichever comes first.

        So, in the first round, it could cost the state as much as $500,000. That could happen in a single year, or spread out between now and 2027. It’s based on sales, which are market driven. We just cannot know how that will pan out.

        I wrote “first round” because there is non-binding language indicating that the Legislature intends to extend the exemption if sales of ebikes go up 25% or more compared to 2020 levels – which seems pretty likely for two reasons.

        First, the goal will probably be met: a 25% increase in sales over six years is pretty likely given that e-bikes are still relatively new but becoming increasingly popular with a growing target demographic (which is Arguement #1for why this tax break isn’t necessary).

        Second, the Legislature is notorously spineless when it comes to rolling back tax breaks. Republicans support any tax break for any reason; Democrats worry that voting to close a tax break will be scored as a tax increase.

        This idea is horrible public policy, but great politics for Ds and Rs alike – so it’s very likely to pass.

  8. NickS

    There seems to be a lot of opposition to the idea in the comments, with many of the comments indicating a feeling that this proposed sales tax exemption would benefit people who don’t need the exemption (wealthy tech workers, etc.). Others feel its unfair that e-bikes are included but traditional / non-powered bikes are not.

    I think the sales tax exemption is a great idea, with some refinement. Put a reasonable cap on the dollar amount of the sale that the exemption covers. Make sure that sales of used electric bikes are also included.

    I don’t think many will go, “Gee, I’m definitely going to go buy an electric bike because they’re not charging me sales tax on it.” But I do think that it can add to worth of mouth appeal. “I started riding a bike to work, it’s faster than the bus, cheaper than gas and parking, I’m not covered in sweat when I get to work, and I found out when I bought it that I didn’t have to pay sales tax on it!” It can help build a little excitement about the idea, everyone loves a deal.

    To those thinking that $500,000 is being wasted this way, $500,000, is a rounding error on single line items in the state budget. I say if it gets a few more people trying out bicycling as a commute and recreation option in our very hilly area, awesome.

    To those still whining about “motorized bicycles” invading “our trails”, try to get over it. That ship has sailed; I would argue that our bicycling world is now more diverse and richer for it. My own less than scientific observations are that a significantly higher percentage of e-bike riders are people of color, compared to the percentage of regular pedal powered bikes. I also see more heavy riders giving e-bikes a try. The addition of a small, zero point-pollution (as well as overall pollution in our local energy grid) motor also opens up a whole new world for bicyclists of all abilities to explore beyond their local area and actually consider turning bicycling from a very limited recreational exercise (often loading bicycles onto the back of an SUV and driving to a relatively flat trail area) to something that the overall population could use to get around our hilly neighborhoods and to commute across the city.

    A pedal assist class I, II electric bike, often coming in at around 60lbs and providing assistance up to 20 mph, is not a motorcycle, nor is a class III providing top assisted speed of 28 mph. An average motorcycle weighs 700 pounds, can reach speeds well in excess of 100mph, tends to be noisy, and has an internal combustion engine. Trying to conflate the two using terms like “motorized bicycle” is disingenuous at best.

    1. Ballard Biker

      To those still whining about “motorized bicycles” invading “our trails”, try to get over it.

      What should I get over? Motorized bicycles whizzing by at 30 mph on the BGT without so much as a bell or voice warning? Or maybe their refusal to stop or yield for pedestrians because (1) they don’t feel like it and (2) it’s hard to stop such a massive bike in a short distance going at high rates of speed?

      I’m not opposed to motorized bicycles, I think they are an excellent means of carbon free local transportation that can supplement a lot of car trips. But they don’t belong on our trails, bike lanes or sidewalks.

      With SDOT reducing many streets to 25 mph, it seems like they should be using roadways, where their speeds are more in line with the infrastructure. The original argument for allowing them on trails, etc, was that these motorized bicycles would have top speeds of 10, maybe 15 mph. That was clearly false from day 1 when people chose to purchase and use 20+ mph motorized bicycles, against the newly established law.

      1. You are right, I suppose. As one of the first E bike dealers I have seen even the first E Bikes that topped out at 20 MPH as a problem for multi use bike trails. The hope that people would voluntarily keep their speed down to the max bike trail speed limit went out the window with “racing teams” using the bike paths for training rides on “analog” bicycles. Our goal in decades of bicycle retail has been to reduce the dependency on cars and live healthier lives. The E Bike certainly has made that goal more attainable to a broader base. As we work to improve the on road bicycle infrastructure and teach proper route selection planning there should always be a connection from point A to B that is safe and efficient. As of now there are many gaps in the comprehensive plan however and some bike paths need to be utilized for safety and rider confidence. Where there are on street alternatives such as Greenways and protected lanes there certainly should be restrictions on E Bike use on bike paths. The north end as you alluded to, near the BGT has a developing infrastructure beyond most of the rest of Seattle. (West Seattle?) A good example is the connections to the lower bridge in West Seattle where bike paths are the limited safe access to get across the only bridge to downtown. The same is true in Ballard where the option to the Shilsho trail is Leary Way. Until Leary Way becomes more bicycle friendly the bike path is still the best route. The E bike is not like a motorcycle in terms of highway safety. E Bike riders are immensely more venerable. So what is needed across the entire city is an analysis on the capacity of streets or bike paths to handle bicycle traffic in general. Setting comprehensive criteria for the variables on any roadway or bike path would help in those determinations. When that is done then signage should go up to advise E Bike riders where they cannot ride and where the better route might be. Who knows if they will abide but if we give it a shot perhaps it will improve the situation for you and others. In the meantime any initiative that supports the growing evolution away from car dependency should be considered as a value including light rail and bus transit, telecommuting and working from home, and any form of health sustaining bicycle use.

      2. asdf2

        My e bike is not even capable at going 30 mph down the Burke Gilman. The motor cuts off at 20, although I usually take the Burke at around 15 and go 20 on the roads or less congested trails such as the 520 bridge.

        Speaking of 520, if ebikes were not allowed on trails, I don’t know how you’d be able to legally get across the lake at all in one. They’re too slow to ride on the freeway and too heavy to put on a bus rack. The bike accessible options for the I-90 and 520 bridges are trails, as is the Burke Gilman to the north. That would leave the options of riding on highway 522 or taking city streets through Renton around the south side of the lake. Such detours would be excessive and far less safe than just riding the trails on the floating bridges.

        Crossing the ship canal would have similar issues. Am I supposed to ride with the cars over the metal grating to avoid riding on the sidewalk?

    2. jay

      The half a million is certainly not being wasted, it could pay for itself almost instantly. If many people have electric bikes nominaly capable of keeping up with other motorised traffic (ignoring for the moment that about 10 over the limit seems to be pretty common for cars) then there will be no need for dedicated bike infrastructure.

      Since even if one doesn’t have to pedal, one can still get rained on, I suspect that a lot of people who aren’t motivated enough to pedal are not going to reduce their car trimps as much as the lobbyists may claim. Since _most_ bike shops that sell e-bikes also sell conventional bikes I’m interested who the lobbyists even are(cough, Rad Power, cough). Sure e-bikes tend to be more expensive so potentially more profitable, and no doubt generate more service revenue, but they probably also generate more complaints. I wonder about repeat sales, if one buys a crummy bike, will one later upgrade, or just quit riding? if they upgrade will they go back to the store that sold them the crummy bike, or try somewhere else?

      A cheap e-bike is a cheap bike, full stop.
      People who can afford a good e-bike don’t need the subsidy, and the people who do “need” a subsidy will probably be poorly served by a crummy bike.

      While I’m lucky enough to have a relatively short commute I still put about 2000 miles a year on a non-electric bike, which I imagine is likely more that the average cheap e-bike will do in its lifetime.

      1. NoSpin

        “The half a million is certainly not being wasted, it could pay for itself almost instantly.”

        Sounds like the debunked conservative rationale for every tax break ever.

  9. eddiew

    The state tax system is broken. It has too many exemptions today; it is like Swiss cheese. Tax reform is needed. This proposal is too narrow and not means tested. Those opposing bike friendly infrastructure already assert cyclists do not pay enough in taxes.

    1. alkistu

      You are so right. The way large companies get away without paying taxes and small businesses pick up the tab is ridiculous. Bike shops have never benefited from these tax breaks even though what they offer has immeasurable public benefits. The need to get folks in America back into healthy lifestyles could not be understated at this moment. And yes, why do these folks assert that cyclists don’t pay their fair share in infrastructure revenue. Almost all buy car tabs, many pay property tax and many own small businesses in Seattle that are accessed all kinds of tax related to store front street use. The premise that cyclist do not buy enough gas to fund federal projects has nothing to do with municipal improvements. Given the fact that bicycles do not destroy our street surfaces, perhaps it is the car drivers that are the freeloaders. Our streets are being pounded by rain and then heavy vehicles and look at what shape they are in this winter. Oh I know, the big trucks and luxury SUVs are their limited ways to feel good about themselves. I always feel better when I choose to use my bicycle over my car.

  10. Alec

    Awful proposal. The money would be swiped up quickly by affluent people buying e mountain bikes for $5000-10000 who would just ride them recreationally, not in lieu of car trips. E-bikes sales are already growing drastically without help. If the legislature insists on a tax break like this, it should include all bikes, and have a low cap between $1000 and $1500 (the price of an entry level, commuting focused ebike).

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