Washington State: New Heavy Rental Equipment Tax Imposed Beginning in 2022

The Washington Department of Revenue issued a Special Notice addressing the state’s new heavy equipment rental tax. Effective January 1, 2022, dealers will be required to charge their customers a heavy equipment rental tax of 1.25 percent on rentals of equipment made from a retail location in Washington. The tax will be to the location at which the equipment is picked up by or delivered to the customer.  This new tax is administered much like the retail sales tax and is imposed in addition to the state and local sales tax. The rental tax applies to the pre-sales tax rental price and must be separately stated on the customer invoice. A heavy equipment rental dealer is defined as any person that has more than 50 percent of their annual business revenue derived from renting heavy equipment. The notice addresses the exceptions to the heavy equipment rental tax and sets forth a non-exhaustive list of property considered heavy equipment rental property. Importantly, the tax applies only to heavy equipment exempt from property tax. For questions on the forthcoming heavy equipment rental tax please contact Michele Baisler.