WA House advances ‘Tesla tax’ bill after tense late-night debate (2025)

Democrats in the Washington state House advanced legislation in the early morning hours of Tuesday that some have nicknamed the “Tesla tax” bill.

House Bill 2077 cleared the lower chamber on a vote of 52-45, with only Democratic support.

HB 2077 and its companion, Senate Bill 5811, would impose a tax on the banking and sale of a manufacturer’s extra zero-emission vehicle (ZEV) credits.

Backers say the measure would rev up revenues to help offset Washington’s deep budget deficit and invest in much-needed electric-vehicle infrastructure and incentives.

But it has also attracted fierce opposition. Detractors argue the bill seeks to punish electric-vehicle maker Tesla — namely, its CEO and Trump administration “special government employee” Elon Musk.

State Rep. Jeremie Dufault, a Selah Republican, said on the House floor that he doesn’t believe the state’s tax policy should be used to target or attack a single person for their political activity or positions.

“This bill taxes one company in Washington state,” Dufault said. “That is the wrong direction for tax policy, especially when the proponent is an outspoken political advocate.”

Musk has been the subject of derision in political protests in Washington state and nationwide during the second term of President Donald Trump. The billionaire tech magnate has headed a charge via the new Department of Government Efficiency to slash federal funding, programs and jobs.

Washington in 2020 adopted California’s ZEV regulations to phase out gas cars by 2035. For model year 2026, vehicle companies will need to meet a threshold that 35% of new cars are zero emission; for the following model year, that percentage rises to 43%.

But more traditional auto manufacturers that are falling behind can buy credits from their “more saintly” counterparts, as the Wall Street Journal put it in an April 20 op-ed. Dufault read from the piece during floor debate. Tesla — which exclusively deals in electric cars — naturally has the most emissions credits banked, according to the Journal.

In 2024, less than 10% of all cars in Washington were reportedly sold by Tesla, yet the EV giant enjoys roughly 54% of all emissions credits statewide.

Tesla did not immediately respond to McClatchy’s request for comment.

However, speaking on behalf of Tesla at an April 18 public hearing, lobbyist Jeff Gombosky argued that the bill runs “counter to the intent of the surplus ZEV credits” idea. He also said it would hurt other electric-vehicle manufacturers as well, not only Tesla.

House Majority Leader Joe Fitzgibbon, the bill’s prime sponsor and a West Seattle Democrat, defended the measure on the floor in the early hours of April 22.

“Whether it’s one company or 10 companies or 100 companies, the purpose of this (ZEV) program is not to generate windfall profits for any manufacturer,” he said. “The purpose of this program is to get electric vehicles more accessible to Washingtonians.”

State Rep. Jim Walsh, an Aberdeen Republican, cast doubt on the bill’s constitutionality.

House Republicans have tried — with amendments and standalone legislation — to water down or head off Washington’s so-called Tesla tax bill.

Republican state Rep. Joshua Penner of Orting likened the controversial measure to punishing students for earning good grades, or fining firefighters for extinguishing a blaze.

State Rep. Travis Couture, an Allyn Republican, argued the proposal would lead to fewer zero-emission vehicles in the state because they’d ultimately become more expensive. The Wall Street Journal article asks: What’s stopping Musk from boosting the price on Tesla credits to help recoup money lost from the new tax?

Couture noted that he drives a Ford F-150 “gas-guzzling pickup truck.”

“And you know what? I think there’s going to be more F-150s on the road as a result of this bill because you’re de-incentivizing it with this tax,” he said.

Fitzgibbon applauded the state’s innovative businesses that work to usher in cleaner energy, air and transportation and a safe climate. Some companies rake in handsome earnings based on that transition, he said.

The bill wouldn’t scorch all of those profits, Fitzgibbon said.

“It just says that a share of those profits would be better served investing in incentives and in infrastructure for Washington EV drivers than to exclusively pad the bottom lines of companies that are doing very well in today’s economy,” he said.

This story was originally published April 22, 2025 at 2:04 PM.