Alternative Fuel Cars & Some Hybrids to be Tax Exempt January 1 - NBC Right Now/KNDO/KNDU Tri-Cities, Yakima, WA |

Alternative Fuel Cars & Some Hybrids to be Tax Exempt January 1

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KENNEWICK, Wash.-- Starting January 1, 2009, certain cars will be exempt from sales tax.
Alternative fuel vehicles and some hybrids will be tax free.  Hybrids must get more than 40 miles per gallon on the highway in order to be tax exempt.

Other cars must be clean alternative fuels, such as natural gas, propane, hydrogen, or electricity.  The legislature actually enacted this exemption in 2005 before the spike in gas prices.  The exemption will apply to qualifying vehicles from January 1, 2009 until December 31, 2010.

Car dealerships in the Tri-Cities say they can't keep hybrids on their lots as it is, and this will help the booming demand for fuel efficient cars.  Sales Manager Jesse Arriaga says, "Word of mouth on that kind of stuff is huge, so this person will tell that person.  Obviously, they'll be like, 'Hey go buy this car.  It's this much on gas mileage.  You don't have to pay taxes on it.'"

Arriaga says with this new tax exemption, you'll save over $2,000 on a $25,000 car.

The State Department of Revenue says the exemption will also typically apply to leases and out-of-state purchases.