A new proposal in Olympia includes a 10% “luxury tax” on the purchase price of vessels that exceeded $500,000.

Washington State’s newly introduced Senate Bill 5801 (SB 5801) is a very broad transportation funding bill, and includes a proposed “luxury tax” on recreational watercraft, RVs, airplanes, and automobiles above a price threshhold.

SB 5801 is part of the legislature’s efforts to solve what is, by all accounts, an extremely difficult budget puzzle for the state. SB 5801 works to close budget gaps through some new tax revenues, and avoid more of what already appear to be inevitable significant cuts.

The new luxury tax on boats proposal is a small portion of a large bill, but its relevance may not be small to boaters and especially to marine industry businesses. The luxury tax proposal includes an extra 10% charge on purchase prices exceeding $500,000 for boats, RVs, and planes. A similar tax would be levied on automobiles over $100,000. The tax would be enforced on the value of the purchase above those thresholds.

The legislative process is moving quickly, with the first reading of the original bill on March 25, 2025. SB 5801 has since passed the Senate and is now “in committee” in the House.

A coalition of recreational marine associations—including the Northwest Marine Trade Association (Seattle Boat Show producers), Northwest Yacht Brokers Association (Boats Afloat Show producers), and the Recreational Boating Association of Washington (RBAW), as well as two national-level marine industry associations—has co-signed a letter in opposition to the bill, expressing concerns that include the following:

• Luxury taxes have historically returned tax revenues below forecasts and had adverse economic impact on the marine industry. The coalition notes 77% reduction in yacht sales after one year following a 1991 federal luxury tax bill (that was repealed in 1993), as well as an approximate 85% reduction in new boat sales after a Canadian luxury tax bill went into effect in 2022.
• Reductions in yacht sales affect jobs and small businesses throughout the marine industry, and the letter indicates that 25,000 marine industry jobs were lost following the 1991 U.S. luxury tax.
• Washington State boaters already pay an annual value-based excise tax that is not enforced on the other vehicles included in this luxury tax.
• Wealthy buyers’ may have the ability to circumvent the tax burden by registering their vessels in tax-friendlier locations, including neighboring states.

With SB5801 under consideration in the House, the window for the public to voice its concerns or approval of this proposal is likely short.

To learn more, all associated documents related to this bill are available at leg.wa.gov; and if you really want to dive deep, the recent Senate Transportation public hearing is available here.

Header background photo taken by w:en:User:Zdv.