Washington State Luxury Tax on Yachts

Effective July 1, 2026

Beginning July 1, 2026, Washington State will implement a new luxury tax on recreational boats and yachts purchased or first leased in the state. This tax is in addition to existing Washington sales tax and the annual watercraft excise (title) tax.

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At La Conner Yacht Sales, a Washington State-based yacht brokerage, we believe it’s important for buyers and sellers to understand how this change may affect pricing, timing, and overall transaction costs.

 

What Is the Luxury Tax?

• Rate: 0.5%

• Effective date: July 1, 2026

• Applies to: Most recreational yachts and powerboats required to be registered in Washington

• Calculated on: The full purchase price of the vessel

• Collected at: Time of sale or at lease inception

This tax applies to new and pre-owned yachts and is assessed regardless of vessel age.

 

Important Information for Buyers

• No trade-in offset:
  The luxury tax is calculated on the entire selling price, even if a trade-in is part of the transaction.

• Closing date matters:
  The tax is based on the date of closing, not when the yacht is listed or when an offer is accepted.

 

Example

A yacht purchased for $350,000 and closed on July 15, 2026 would incur a luxury tax of $1,750, in addition to Washington sales tax and the annual watercraft excise tax.

 

Exemptions

Certain vessels may be exempt, including boats not required to be registered in Washington, commercial fishing vessels, and select nonprofit-owned vessels. We are happy to help review whether a specific transaction may qualify.

 

Our Commitment

At La Conner Yacht Sales, we stay current on regulatory changes to guide our clients through every step of the sales process. While we do not provide legal or tax advice, we work closely with trusted industry professionals to help ensure each transaction is handled accurately and transparently. Please note that this information is subject to change, and future updates to timelines or tax amounts may occur.