Government sales

City, county, state governments

Are sales to city, county, or Washington state government exempt from retail sales tax?

The retail sales tax is due on sales of vehicles to the state of Washington, its departments and institutions and to counties, cities, school districts and all other municipal subdivisions of the state.

Are there any exceptions?

Yes. Vehicles loaned to and used for driver education by schools. See Driver Education Vehicles and Van Pools/(Ride Sharing) Vehicles.


Washington Administrative Code (WAC) 458-20-189

United States government

What constitutes a sale to the federal government?

The sale of a vehicle must be made directly to the United States, its departments, institutions and instrumentalities, or agencies directly operated and controlled by the federal government for the benefit of the general public. See Government Sales below.

Sales to institutions which have been chartered or created under federal authority which are not directly operated and controlled by the government for the benefit of the general public are not considered sales to the federal government.

Sales to representatives or employees for own use

Sales to persons in the Army, Navy or Air Force of the United States, including civilian employees in such service, are not exempt from the retail sales tax. See Military.

No exemption is permitted for sales to or by voluntary unincorporated organizations of Army or Navy personnel which are not instrumentalities of the United States, national banking associations, persons licensed to engage in private businesses under federal statutes, or contractors engaged in performing contracts for the United States government.

Likewise, the retail sales tax applies to sales made to the Washington State Department of Social and Health Services, Employment Security Department and Department of Health, even when those departments are reimbursed with federal funds.

B&O tax

No deductions are allowed from the B&O tax for business transacted with the United States, its departments, institutions or instrumentalities.

Retail sales tax

Direct purchases by the federal government are exempt from the retail sales tax, but purchases by others, whether with federal funds or through a reimbursement arrangement, are fully subject to the retail sales tax. Sales to federal employees or representatives of the federal government are subject to sales tax, even though the federal government may reimburse them for all or a part of such expenses.

United States government departments, instrumentalities, and agencies

  • Agriculture.
  • Commerce.
  • Energy (Including Bonneville Power Administration).
  • Interior (Including the Tennessee Valley Authority).
  • Justice.
  • Labor.
  • Post Office.
  • State.
  • Treasury.
  • National Military Establishment (Army, Navy and Air Force).
  • U.S. Small Business Administration.

Agencies congressionally exempt by establishment or specific statutory exemption

  • Central Banks for Cooperatives (if stock is owned by the United States).
  • Civil Service Commission.
  • Export-import bank.
  • Farm Credit Administration.
  • Farm credit banks.
  • Farm Loan Association.
  • Federal Deposit Insurance Corporation.
  • Federal Home Loan Banks.
  • Federal Home Loan Mortgage Corporation.
  • Federal Housing Administration (including Housing and Urban Development).
  • Federal Land Banks.
  • Federal National Mortgage Association.
  • Federal Reserve Banks.
  • Federal Savings and Loan Insurance Corporation.
  • Federally Chartered Credit Unions.
  • Government National Mortgage Association.
  • Home Owner's Loan Corporation.
  • Rural Electrification Administration.
  • Social Security Board.
  • United States Maritime Commission.
  • Veteran's Administration.



Washington Administrative Code (WAC) 458-20-190
Washington Administrative Code (WAC) 458-20-177