Article
Washington state implements a new 1.25% tax on heavy equipment rentals
March 14, 2022 · Authored by Shane Griffiths
On Jan. 1, 2022, Substitute Senate Bill 5628 went into effect in Washington state.
The bill implements a heavy equipment rental tax equal to 1.25% of the rental price of heavy equipment. There is close interplay between property rentals subject to the 1.25% tax and the new property tax exemption for heavy equipment rental property that must be claimed by April 30, 2022.
Overview of heavy equipment rental tax
Washington businesses that receive more than 50% of their revenue from the rental of heavy equipment must now charge customers a 1.25% tax on the price of each in-state rental of heavy equipment.
The tax applies to rentals of heavy equipment rental property that are:
- Mobile
- Customarily used for construction, earthmoving, or industrial applications
- Rented without an operator
Examples include:
- Earthmoving equipment, including but not limited to backhoes, loaders, rollers, excavators, bulldozers, and dump trucks
- Self-propelled vehicles that aren’t designed to drive on highways
- Industrial electrical generation equipment
- Industrial material handling equipment
- Equipment used on shoring, shielding, and ground trenching
- Portable power and heating, ventilation, and air conditioning (HVAC) generation equipment
- Attachments to heavy equipment rental property such as buckers, augers, hammers for backhoes, hoses, fittings, piping, chains, tools, and portable power connections
- Ancillary equipment such as generators, ground-thawing equipment, fluid transfer equipment, pumping equipment, portable storage, portable fuel and water tanks, and light towers
- Equipment or vehicles not subject to the vehicle license fees and not required to register with the Department of Licensing
Collecting and remitting the heavy equipment rental tax
The heavy equipment rental tax is in addition to any applicable retail sales taxes. Businesses must enumerate the state retail sales tax and the heavy equipment rental tax when both apply.
Calculating federal excise tax for heavy trucks, trailers, and tractors
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.