Washington residents are in for a more expensive ride, literally. According to Washington State Standard, for the first time in nearly a decade, the Washington Legislature approved a six cent gas tax increase set to go into effect in July 2025. This increase would bring the state’s per-gallon gas tax from 49.4 cents to 55.4 cents. That is before a 2% year-over-year increase to account for inflation. The state tax on diesel is additionally expected to go up by three cents in July 2025 to 58.4 cents, and another three cents in 2027. Then, a similar 2% year-over-year rise will be implemented to combat rising inflation costs.  

These additional tax hikes on gas and diesel are part of a larger plan to raise $3.2 billion over a six-year period to sustain Washington’s transportation system. Specifically, the gas tax is expected to raise $1.4 billion, while the diesel tax is expected to raise $160 million during the six-year period. The revenue collected will then support maintaining highways, filling potholes, ferry operations, and fish passage restoration, among other general maintenance. Washington lawmakers argue the added costs on gas and diesel-powered vehicles will help sustain and improve Washington’s transportation system; however, many Washington residents remain skeptical.  

While these hikes are essential in garnering additional revenue, Washington will hold the nation’s third-highest gas tax, trailing California and Pennsylvania. A separate article from the Washington State Standard mentions that the new tax hikes are added on top of federal fuel taxes, which are 18.4 cents for gas and 24.4 cents for diesel. Washington’s Department of Revenue lists a combined state and federal tax rate of 73.8 cents per gallon of gas after the hike takes effect, while for diesel, there is a combined state and federal tax rate of 82.8 cents. 

Washington’s gas prices have exceeded the national average for a while, and now, the price of fuel will go up even further. According to the Washington State Standard, the average price for a gallon of regular gas in Washington sat around $4.45; however, in 2024, the same gallon cost consumers $4.33, as reported by the AAA. Nationally, the average price for a gallon of regular gas sat at $3.20, which is noticeably cheaper in Washington state. KOMO News reports a price range between $4.22 in Skagit County and $4.70 in King County along the I-5 corridor. These varying costs have people in Seattle divided on whether the increased tax can be substantiated. 

Interviewees have told KOMO News they are not seeing the city or road infrastructure improvements that validate the additional costs imposed on them. KOMO News interviewed Timothy Durden, a Seattle local, who said, “Seattle doesn’t pay [any] money on the infrastructure here. You go down I-5, it bumps everything. So, I don’t think we spend enough money on that.” Another Seattle resident, Quinn Sullivan, told KOMO News, “We’re basically California now with our gas prices,” suggesting Washington’s gas prices are rather overwhelming for drivers. Seattle residents are definitely not pleased with the extra cost of gas, and many feel that the extra cost does not seem substantial to the improvements they want to see in Washington. 

With statewide tax hikes on gas and diesel-powered vehicles, Washington residents may be looking to reduce or cut fuel costs altogether. To reduce or cut these costs, alternative fuel, plug-in hybrid vehicles (PHEVs), and electric vehicles (EVs) may be appealing choices for Washington residents. The Washington State Department of Licensing (DOL) offered tax exemptions for alternative fuel and PHEVs, which expired on July 31, 2025. To qualify for the tax exemption, new vehicles must have a purchase price of $45,000 or less, or $30,000 or less for used vehicles. Consumers should be aware that while a trade-in can help lower the costs of a vehicle, it cannot qualify for tax exemptions. 

For instance, if a new vehicle cost $48,000 and a customer had a trade-in car worth $6,000, the tax exemption would not apply even though the cost of the new vehicle had been brought down to $42,000. Alternatively, there is a federal tax credit of up to $7,500 for qualified plug-in EV or fuel cell electric vehicles (FCEV) as part of the Inflation Reduction Act of 2022 for purchases made in 2023 or later. The Internal Revenue Service (IRS) lists who qualifies and what vehicles qualify for the federal tax credit. 

However, Sec. 70502 in the One Big Beautiful Bill Act under the Trump administration is ending the $7,500 federal tax credit after September 30, 2025. Prospective buyers have an opportunity to take advantage of the federal tax credit before then and save more on their EV and FCEV purchases. In fact, EVs may be cheaper for some consumers, especially with federal and local incentives. CNBC says, “While EVs still tend to cost more upfront to purchase, recurring charges for fuel and maintenance are generally cheaper – adding up to a total lifetime cost that can be lower than that of a gas vehicle.” 

EVs have lower maintenance costs, which are responsible for the long-term savings buyers can expect. Still, buyers will need to do their research to ensure EV ownership makes sense. Charging costs can vary widely depending on the location. The same article from CNBC notes, “Home charging access reduces the lifetime cost of a 300-mile midsize SUV by roughly $10,000, on average, and up to $26,000, according to the University of Michigan study.” While alternative fuel, PHEVs, EVs, and FCEVs will surely appeal to buyers amid rising gas and diesel costs, buyers should conduct plenty of research and take advantage of both federal and local incentives to see savings on new purchases and ownership. 

Washington residents will be facing a steep road ahead. They will be paying some of the highest gas and diesel taxes in the nation, in an effort to sustain and improve their own transportation system. However, the economic environment will become more complex with the added costs on owners of gas and diesel-powered vehicles, the expiration of tax exemptions for alternative fuel and PHEVs, and the end of the federal tax credit for EVs, all of which may ultimately increase expenses for interested consumers.