School bus fuel tax exempt.

AN ACT Relating to providing an exemption for taxes on fuel used 1
in school buses; amending RCW 82.38.080 and 82.38.180; creating a new 2
section; and providing an effective date. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 82.38.080 and 2013 c 225 s 111 are each amended to 5
read as follows: 6
(1) The following sales of special fuel are exempt from payment 7
of the tax imposed by this chapter: 8
(a) Sales to the state of Washington, any county, or any 9
municipality when the fuel is used for street and highway 10
construction and maintenance purposes in motor vehicles owned and 11
operated by the state, county, or municipality; 12
(b) Sales for use in publicly owned firefighting equipment;13
(c) Sales to the United States government; 14
(d) Sales to a private, nonprofit transportation provider 15
regulated under chapter 81.66 RCW when the fuel is for use in 16
providing transportation services for persons with special 17
transportation needs; 18
(e) Sales of waste vegetable oil as defined under RCW 82.08.0205, 19
if the oil is used to manufacture biodiesel; 20
H-2512.2
HOUSE BILL 2126
State of Washington 69th Legislature 2026 Regular Session
By Representatives Marshall, Jacobsen, Chase, Schmidt, Leavitt,
Abbarno, Simmons, Barkis, Barnard, Connors, Zahn, Dye, Shavers,
McClintock, Griffey, Valdez, Couture, Pollet, and Bernbaum
Prefiled 12/10/25. Read first time 01/12/26. Referred to Committee
on Transportation.
p. 1 HB 2126
(f)(i) Sales to privately owned urban passenger transportation 1
systems and carriers as defined in chapters 81.68 and 81.70 RCW. No 2
exemption or refund may be granted for special fuel used by any 3
privately owned urban transportation vehicle, or vehicle operated 4
pursuant to chapters 81.68 and 81.70 RCW, on any trip where any 5
portion of the trip is more than ((twenty-five)) 25 road miles beyond 6
the corporate limits of the county in which the trip originated.7
(ii) For purposes of this subsection (1)(f), "privately owned 8
urban passenger transportation system" means every privately owned 9
transportation system having as its principal source of revenue the 10
income from transporting persons for compensation by means of motor 11
vehicles or trackless trolleys, each having a seating capacity for 12
over ((fifteen)) 15 persons over prescribed routes in such a manner 13
that the routes of such motor vehicles or trackless trolleys, either 14
alone or in conjunction with routes of other such motor vehicles or 15
trackless trolleys subject to routing by the same transportation 16
system, do not extend for a distance exceeding ((twenty-five)) 25 17
road miles beyond the corporate limits of the county in which the 18
original starting points of such motor vehicles or trackless trolleys 19
are located; ((and))20
(g)(i) Sales to publicly owned and operated urban passenger 21
transportation systems. 22
(ii) For the purposes of this subsection (1)(g), "publicly owned 23
and operated urban passenger transportation systems" include public 24
transportation benefit areas under chapter 36.57A RCW, metropolitan 25
municipal corporations under chapter 36.56 RCW, city owned transit 26
systems under chapter 35.58 RCW, county public transportation 27
authorities under chapter 36.57 RCW, unincorporated transportation 28
benefit areas under chapter 36.57 RCW, and regional transit 29
authorities under chapter 81.112 RCW; and30
(h) Sales of special fuel or motor vehicle fuel to school 31
districts for use in school buses operated in accordance with chapter 32
28A.160 RCW. 33
(2) The following sales of motor vehicle fuel are exempt from 34
payment of the tax imposed by this chapter: 35
(a) Sales to the armed forces of the United States or to the 36
national guard when the fuel is used exclusively in ships or for 37
export from this state; 38
(b) Sales to foreign diplomatic and consular missions, if the 39
foreign government represented grants an equivalent exemption to 40
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missions and personnel of the United States performing similar 1
services in the foreign country; and 2
(c) Sales of fuel used exclusively for racing that is not legally 3
allowed on the public highways of this state. 4
Sec. 2. RCW 82.38.180 and 2013 c 225 s 119 are each amended to 5
read as follows: 6
(1) Any person who has purchased fuel on which tax has been paid 7
may file a claim with the department for a refund of the tax for:8
(a) Fuel used for purposes other than for the propulsion of motor 9
vehicles upon the public highways in this state. However, a refund 10
may not be made for motor vehicle fuel consumed by a motor vehicle 11
required to be registered under chapter 46.16A RCW.12
(b) Fuel exported for use outside of this state. Fuel carried 13
from this state in the fuel tank of a motor vehicle is deemed to be 14
exported from this state. Fuel distributed to a federally recognized 15
Indian tribal reservation located within the state of Washington is 16
not considered exported outside this state. 17
(c) Tax, penalty, or interest erroneously or illegally collected 18
or paid. 19
(d) Fuel which is lost or destroyed, while the licensee is the 20
owner thereof, through fire, lightning, flood, windstorm, or 21
explosion. 22
(e) Fuel of ((five hundred)) 500 gallons or more which is lost or 23
destroyed while the licensee is the owner thereof, through leakage or 24
other casualty except evaporation, shrinkage, or unknown causes.25
(f) Fuel used in power pumping units or other power take -off 26
equipment of any motor vehicle which is accurately measured by 27
metering devices that have been specifically approved by the 28
department or by a formula determined by the department.29
(2) Any person who has purchased special fuel on which tax has 30
been paid may file a claim with the department for a refund of tax 31
for: 32
(a) Special fuel used for the operation of a motor vehicle as a 33
part of or incidental to logging operations upon a highway under 34
federal jurisdiction within the boundaries of a federal area if the 35
federal government requires a fee for the privilege of operating the 36
motor vehicle upon the highway, the proceeds of which are reserved 37
for constructing or maintaining roads in the federal area, or 38
requires maintenance or construction work to be performed on the 39
p. 3 HB 2126
highway for the privilege of operating the motor vehicle on the 1
highway; 2
(b) Special fuel used by special mobile equipment as defined in 3
RCW 46.04.552; 4
(c) Special fuel used in a motor vehicle for movement between two 5
pieces of private property wherein the movement is incidental to the 6
primary use of the vehicle; and 7
(d) Special fuel inadvertently mixed with dyed special fuel.8
(3) Any person who has purchased motor vehicle fuel on which tax 9
has been paid may file a claim with the department for a refund of 10
tax for: 11
(a) Motor vehicle fuel used by a private, nonprofit 12
transportation provider regulated under chapter 81.66 RCW to provide 13
transportation services for persons with special transportation 14
needs; ((and))15
(b) Motor vehicle fuel used by an urban passenger transportation 16
system. For purposes of this subsection "urban passenger 17
transportation system" means every transportation system, publicly or 18
privately owned, having as its principal source of revenue the income 19
from transporting persons for compensation by means of motor vehicles 20
or trackless trolleys, each having a seating capacity of over 21
((fifteen)) 15 persons, over prescribed routes in such a manner that 22
the routes of such motor vehicles or trackless trolleys, either alone 23
or in conjunction with routes of other such motor vehicles or 24
trackless trolleys subject to the routing by the same transportation 25
system, do not extend for a distance exceeding ((fifteen)) 15 road 26
miles beyond the corporate limits of the city in which the original 27
starting points of such motor vehicles or trackless trolleys are 28
located. No refunds are authorized for fuel used on any trip where 29
any portion of the trip is more than ((fifteen)) 15 road miles beyond 30
the corporate limits of the city in which the trip originated; and31
(c) Special fuel or motor vehicle fuel used by school districts 32
governed by chapter 28A.160 RCW. 33
(4) Recovery for such loss or destruction under subsections 34
(1)(d) or (e) or (2)(d) of this section must be susceptible to 35
positive proof thereby enabling the department to conduct such 36
investigation and require such information as it may deem necessary. 37
In the event that the department is not satisfied that the fuel was 38
lost, destroyed, or contaminated as claimed because information or 39
proof as required hereunder is not sufficient to substantiate the 40
p. 4 HB 2126
accuracy of the claim, it may deem such as sufficient cause to deny 1
all right relating to the refund or credit for the excise tax paid on 2
fuel alleged to be lost or destroyed. 3
(5) No refund or claim for credit may be approved by the 4
department unless the gallons of fuel claimed as nontaxable satisfy 5
the conditions specifically set forth in this section and the 6
nontaxable event or use occurred during the period covered by the 7
refund claim. Refunds or claims for credit are not ((be [are not] )) 8
allowed for anticipated nontaxable use or events. 9
NEW SECTION. Sec. 3. RCW 82.32.805 and 82.32.808 do not apply 10
to section 1 of this act.11
NEW SECTION. Sec. 4. This act takes effect July 1, 2026.12
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