The way I read it if you have owned the boat more than one year you do not have to pay the Use (sales) tax. Annual excise tax is different of course as DougR mentions below. We found it to vary a lot from state to state. We are in Oregon with no sales tax. If we move out boat to California after owning it more than 365 days we do not have to pay the sales tax. Moving to Washington even if you own it ∞ (infinity) years you still have to pay the sales tax. The Washington poobahs consider it a "fairness" issue. Washington does not have an income tax, our is effectively 9% on everything over the poverty line, including capital gains. Comparing those 2 we both pay about the same tax, it's just that we pay it when we make the money, Washingtonians pay when the spend it. (Must Not Rant...!)