Boat LLC in Washington (2026): 0.5% Excise & Vessel Tax

An LLC can be the right way to hold a boat kept in Seattle, Tacoma, or the San Juans, but in Washington it changes liability and ownership, not the tax bill. The state charges an annual 0.5% watercraft excise tax on a boat’s value in place of property tax, layers use tax plus a new 0.5% vessel tax on when you buy, and requires every marina renting a slip for more than 30 days to collect your registration details. Washington has no state income tax today (a 9.9% tax on individuals’ income above $1 million is enacted for 2028, pending a November 2026 repeal vote), but the water isn’t free.

Key takeaways

Washington charges an annual 0.5% watercraft excise tax ($5 minimum) on a boat’s value, in lieu of personal property tax — first collected when you register (prorated to the following June 30), then billed at each renewal, due by June 30.
Buying (or first bringing into Washington) a boat 16 feet or longer on or after July 1, 2026 triggers three separate charges: sales/use tax (7.6%–10.7% combined, depending on location), the new 0.5% recreational vessel tax, and the 0.5% watercraft excise tax, prorated to June 30 when you first register and then billed every year at renewal.
A nonresident whose boat is registered in another state can use it here for up to 60 days without registering; beyond that, a nonresident vessel permit is required — and it generally isn’t available to an entity with a Washington resident as principal. The entity version expires January 1, 2029.
Washington has no state income tax today (a 9.9% tax on individuals’ income above $1 million is enacted for 2028, pending Initiative 645 on the November 3, 2026 ballot), but an LLC that charters the boat can owe the business and occupation (B&O) tax on gross revenue.
An out-of-state LLC — Wyoming, Montana, anywhere — does not escape any of these taxes. They attach to where the boat is used and moored, not the LLC’s home state.

Washington boat LLC at a glance

Annual excise tax: 0.5%; of fair market value, $5 min
New vessel tax: 0.5%; of price, eff. July 1, 2026
Use tax on purchase: 7.6%–10.7%; combined state + local
State income tax: None today; 9.9% over $1M from 2028 unless I-645 passes

The excise tax is collected by the Department of Licensing when you first register and at each annual renewal; use tax and the new vessel tax are administered by the Department of Revenue. A nonresident whose boat is registered in another state or USCG-documented gets 60 days on Washington waters without registering, then a two-month nonresident vessel permit that can be renewed once, for at most six months in any 12-month period. Ownership is recorded on a WA DOL title or, for vessels of 5+ net tons, a USCG Certificate of Documentation, but a boat based here registers with DOL either way and gets a WN number and decals.

Why Washington boat owners form LLCs

The core reasons match our national boat LLC guide, and none of them are about tax:

Liability separation. A guest hurt on the swim step, a crewed weekend gone wrong, a fuel-dock incident — when an LLC owns the boat, a boat-related claim is aimed first at the LLC and its assets rather than everything you own. It never shields you from your own negligence at the helm, and marine insurance stays your first line of defense.
Co-ownership. If you’re splitting a boat and a Puget Sound slip with partners, an LLC gives shared owners real percentages, an operating agreement, and a buyout mechanism that doesn’t require re-titling the boat every time someone joins or leaves.
Privacy. The LLC’s name, not yours, goes on the DOL registration and title or the Coast Guard documentation. Expect your own name on the marina file anyway: Washington requires long-term moorage providers to record a local contact person (RCW 88.02.420).
Transfers. Selling membership interests can move the boat without re-documenting the hull — with the honest caveat that Washington tax agencies look at substance, and a transfer built to dodge tax invites scrutiny.

What an LLC does not do in Washington: make the use tax, the new vessel tax, or the annual watercraft excise tax disappear. Here’s each, precisely.

The 0.5% watercraft excise tax

This is Washington’s signature boat tax, and the one most out-of-state owners underestimate. Under RCW 82.49, registered recreational vessels owe an annual watercraft excise tax of 0.5% of the boat’s fair market value (with a $5 minimum) — charged in lieu of the personal property tax that would otherwise apply. It’s collected through the Department of Licensing: first when you register the boat, prorated from that month through the following June 30, then with each annual registration renewal, due by June 30 (WAC 458-20-23801).

The math is simple and recurring. A boat valued at $200,000 owes about $1,000 a year; a $500,000 vessel, about $2,500. Fair market value is your most recent purchase price, depreciated by how many years you have owned the boat, not by the hull’s age, under the Department of Revenue schedule in WAC 458-20-23801. A boat 30 feet or longer is taxed on 100% of its price in year 1 of ownership, 84% in year 2, 68% in year 5 and 54% in year 10, bottoming out at 35% from year 25 (under 30 feet: 87%, 70% and 55%, bottoming at 34% from year 22). Buy a 20-year-old boat and the clock restarts: you’re taxed on what you paid.

Buying a boat: use tax and the new 0.5% vessel tax

Buy a boat from a Washington dealer and retail sales tax is collected at the sale. Buy from a private party, or out of state, and Washington use tax applies instead. Use tax is due at the combined state-and-local rate for the place you first use the boat, usually its home moorage, under the Department of Revenue’s sourcing rule (WAC 458-20-145, Example 30). DOL, which collects it at registration, says it applies the rate at the buyer’s address, so if your home and slip are in different jurisdictions, ask which rate applies. A Washington dealer sale is taxed at the rate for the dealer location the boat is delivered from, even if it’s delivered to your marina. The state portion is 6.5%, and combined rates run 7.6% to 10.7% (DOR, July–December 2026): Edmonds 10.7%, Seattle 10.55%, Bellingham 9.2%, Anacortes 8.9%, Friday Harbor 8.65%.

New for 2026: on top of sales or use tax, Washington now imposes a recreational vessel tax of an additional 0.5% on the full purchase price of a recreational vessel — with no threshold or trade-in deduction for vessels the tax actually covers — for sales or first use in Washington on or after July 1, 2026. The tax is imposed by RCW 82.08.020(4) and reaches only vessels that owe the watercraft excise tax, so the excise exemptions in RCW 82.49.020 carry over: vessels under 16 feet in overall length, vessels used exclusively for commercial fishing, government-owned vessels, vessels exempt from registration, and vessels owned by youth character-building nonprofits. It’s due at the time of purchase or at first use in Washington: a Washington dealer collects it at the sale, and anyone who didn’t buy from a Washington dealer, including an in-state private-party buyer, pays it when registering with the Department of Licensing.

Visiting boats: the 60-day rule and the nonresident permit

Washington has a real accommodation for visiting boats — but it’s narrower than most owners assume. A nonresident whose boat is currently registered in another state or carries a federal documentation number can use it on Washington waters for up to 60 days without registering here, no permit required. To stay beyond 60 days, the owner must buy a nonresident vessel permit from the Department of Licensing before the 61st day; it’s valid for two months and can be renewed once for another period, and total exempt time can’t exceed six months in any continuous 12-month period. After that, the boat must be registered in Washington or removed from state waters.

The entity trap

For an entity-owned boat, the permit only covers vessels 30 to 300 feet, used for personal purposes or crewed charters of at least three consecutive days, brought in for no more than six months in any 12-month period, and with no Washington resident as an owner or principal of the entity (RCW 88.02.620). Entity applicants also need written approval from the Department of Revenue before applying at DOL. This entity version of the permit expires January 1, 2029, after which only nonresident individuals can get one. So a Washington resident who parks a boat on Puget Sound inside an out-of-state LLC can’t use the nonresident permit to avoid registration, and neither can an entity-owned boat under 30 feet. (The separate “vessel visitor permit” under RCW 88.02.610 is for foreign-registered boats and boats with a U.S. customs cruising license, not for out-of-state LLCs.) The permit is for genuine visitors — not a structure for keeping a home-water boat tax-free. Permit rules change; confirm the current terms with DOL before you rely on them.

No income tax on the LLC — but watch the B&O line

Washington’s big structural advantage is that it has no state personal or corporate income tax today. A single-member LLC that simply holds a boat for personal use generally has no Washington income-tax filing on that basis, and no franchise-tax equivalent of the kind California charges. One caveat for high earners: ESSB 6346 (Chapter 238, Laws of 2026) enacts a 9.9% tax on individuals’ Washington taxable income above a $1 million standard deduction starting January 1, 2028, but Initiative 645, on the November 3, 2026 ballot, would repeal it. The tax falls on individuals; an LLC pays it only if it opts into the optional pass-through-entity tax. For a pure holding structure, that’s still a clean picture.

The exception to keep in view is Washington’s business and occupation (B&O) tax, which is levied on gross business revenue rather than profit. A holding LLC with no revenue typically has no B&O activity. But the moment the LLC charters the boat — even occasionally — it’s operating a business, and charter income can be B&O-taxable, on top of the different insurance, Coast Guard, and licensing exposure that commercial operation brings. If chartering is any part of the plan, design it with a Washington tax professional rather than discovering the B&O line after the fact. The same line applies to planes; see our Washington aircraft LLC guide.

DOL registration vs USCG documentation

Washington runs the same two-track ownership system as the rest of the country, and an LLC can be the owner on either track:

WA DOL registration. Undocumented vessels register with the Department of Licensing, which issues the WN number for the hull and collects the watercraft excise tax at first registration and each renewal. This is also where a private-party purchase gets reconciled against use tax and the new recreational vessel tax.
USCG documentation. Vessels of at least five net tons (a volume measure — many boats from roughly the mid-20-foot range up qualify) wholly owned by U.S. citizens can be federally documented with the National Vessel Documentation Center instead of titled by the state. Documented vessels still owe Washington’s watercraft excise tax and register with DOL for a validation decal, but they carry a federal Certificate of Documentation rather than a state title. An LLC can be the documented owner if it meets the Coast Guard’s citizenship requirements in 46 CFR Part 67; confirm with the NVDC how those rules apply to your LLC’s members and managers before you file.

Either way, the state finds the boat: DOL registration and the moorage records marinas must keep mean the excise and use-tax bills arrive whether the hull carries a WN number or a federal documentation number.

Seattle, Puget Sound and the San Juans: what changes locally

Most of Washington’s recreational fleet lives on Puget Sound and the lakes around Seattle, and the same rules apply at every marina. What changes from one harbor to the next is mainly the local use-tax rate:

Seattle / Lake Union / Shilshole. Seattle’s combined rate is 10.55%, near the top of the state’s range. Any marina renting a slip for more than 30 consecutive days must collect the owner’s name, hull ID and proof of registration (or a statement that you’ll register, or a signed exemption affidavit), keep it for two years, and provide it to DOL, the Department of Revenue or DNR on request (RCW 88.02.420). A boat that stays past six months in any 12-month period is no longer a “visiting” boat under the permit rules.
Tacoma / Gig Harbor / South Sound. Same tax regime: Tacoma’s combined rate is 10.5% and Gig Harbor’s 9.2%, and the excise tax follows the boat’s value, not its location.
San Juan Islands / Anacortes / Bellingham. Prime cruising ground and a natural landing point for boats coming down from British Columbia, at lower rates: Friday Harbor 8.65%, Anacortes 8.9%, Bellingham 9.2%. This is where the nonresident permit gets used legitimately; a Canadian-registered boat staying past 60 days uses the separate vessel visitor permit instead.

None of these locations changes which taxes apply, only the local use-tax rate. A boat kept anywhere on Puget Sound is a Washington-taxed boat; the LLC’s value is in liability, co-ownership, and privacy, not geography.

Before transferring a boat you already own into a new LLC, check the tax consequences and get lender consent if the boat is financed — Washington can treat a transfer for consideration as a taxable event, and a title change can re-trigger use-tax questions.

Where FilingDesk fits

FilingDesk doesn’t file directly in Washington — but Washington’s boat taxes attach to the boat, not the LLC’s home state, so most owners don’t need a Washington entity anyway. FilingDesk forms Wyoming, Florida, and Delaware LLCs today — flat $99 plus the state fee ($199, $224, and $209 all-in respectively), with a human specialist reviewing every filing, EIN and operating agreement included, no upsells. For a Washington-kept boat, a Wyoming LLC is a low-cost, private way to hold the vessel.

Describe your business in plain English and we’ll file it — the boat-specific steps (titling, USCG documentation, insurance, and the tax at purchase) stay with you and your marine pros.

Frequently asked questions

How much is the annual watercraft excise tax in Washington?

Washington charges a watercraft excise tax of 0.5% of the vessel's fair market value each year, with a $5 minimum, collected in lieu of personal property tax on registered recreational boats. The Department of Licensing collects it when you first register the boat, prorated from that month through the following June 30, and then at each annual renewal, due by June 30. A boat valued at $200,000 owes about $1,000 a year. Value is your most recent purchase price depreciated by how many years you've owned the boat, not by the hull's age, and an LLC-owned boat pays it the same as a personally owned one.

Does Washington charge sales or use tax when I buy a boat?

Yes, and as of July 1, 2026 there are two charges at purchase. A Washington dealer collects retail sales tax; a private-party or out-of-state boat brought in for use here owes use tax instead, at the combined state-and-local rate for where the boat is kept (DOL may use your home address's rate): 7.6% to 10.7% as of October 2026, highest in Edmonds and Lynnwood. On top of that, a new 0.5% recreational vessel tax applies to the full purchase price of boats 16 feet and longer sold or first used in Washington on or after July 1, 2026, due at purchase or first use. Both are separate from the 0.5% annual watercraft excise tax, which starts when you first register the boat.

What is the nonresident vessel permit?

A nonresident whose boat is registered in another state or USCG-documented can use it on Washington waters for up to 60 days without registering here. To stay beyond 60 days, you buy a two-month nonresident vessel permit from the Department of Licensing before day 61; it can be renewed once, and total exempt time can't exceed six months in any 12-month period. For entity-owned boats the permit only covers vessels 30 to 300 feet, used for personal purposes or crewed charters of at least three consecutive days, with no Washington resident as an owner or principal and written Department of Revenue approval — so a Washington owner's LLC generally can't use it. The entity version expires January 1, 2029, after which only nonresident individuals can get the permit.

Does a Wyoming or Montana LLC avoid Washington boat tax?

No. Washington's use tax, the new 0.5% recreational vessel tax, and the annual watercraft excise tax attach to a boat used and moored in Washington, not to the owner's state of formation. If the boat lives on Puget Sound, Washington's rules apply regardless of an out-of-state LLC on the title, and registering a Washington-based boat in another state to avoid the excise tax is a gross misdemeanor. Out-of-state LLCs remain useful for liability, co-ownership, and privacy — they are not a device to escape Washington's boat taxes.

Does Washington have a state income tax on an LLC that holds a boat?

No. Washington has no state personal or corporate income tax today, so a single-member LLC holding a boat generally has no state income-tax filing on that basis. One change ahead for high earners: ESSB 6346 (Chapter 238, Laws of 2026) enacts a 9.9% tax on individuals' Washington taxable income above a $1 million standard deduction starting January 1, 2028, unless Initiative 645 on the November 3, 2026 ballot repeals it. That tax falls on individuals; an LLC pays it only if it elects the optional pass-through-entity tax. Washington does levy a business and occupation (B&O) tax on gross business revenue, which can reach an LLC that charters the boat commercially. A pure holding LLC with no revenue typically has no B&O activity, but confirm with a Washington tax professional.

Do I register my boat with Washington or the Coast Guard?

Undocumented vessels title and register with the Washington Department of Licensing, which issues the WN number and collects the excise tax at first registration and each renewal. Boats of at least five net tons can instead be federally documented with the USCG; documented vessels used on Washington waters still owe Washington's watercraft excise tax and register with DOL for a validation decal, but skip state title. An LLC can be the owner in either system, subject to Coast Guard citizenship rules for documentation.

Sources

This guide is general information, not legal advice. FilingDesk is not a law firm.

Forming an LLC for your boat in Washington