2023 property tax legislation

Bills that affect property tax passed in 2023 legislative session:

HB 1265 - Establishing a property tax exemption for adult family homes that serve people with intellectual or developmental disabilities and are owned by a nonprofit.

This bill expands the current real and personal property tax exemption for housing owned or leased by nonprofit organizations, corporations, or associations and provided for eligible persons with developmental disabilities to include property operated by a 10 licensed adult family home regardless of the adult family home operator’s nonprofit status. This bill applies to taxes levied for collection in 2024 and thereafter. HB 1265 takes effect July 23, 2023

HB 1303 - Concerning the administration of property taxes.

This bill is department request legislation. It amends various sections of property tax code to make them easier to understand, more transparent, and more efficient to administer.

Section 1: Amends RCW 82.03.140(1) to allow the department to convert an informal Board of Tax Appeals hearing to a formal hearing for certain types of appeals.

Section 2: Amends RCW 84.40.370 to clarify that the valuation date for government-owned property that loses its exempt status is January 1 of the year the status changed.

Sections 3 – 7: Provides the correction of a levy error that was due to no fault of the taxing district must be made in equal parts over three years if it is determined that such a correction made all at once would result in a tax rate that would exceed the levy’s statutory maximum levy rate.

Section 8: Clarifies that the maximum levy amount for the first levy of a levy restored within six or fewer years from when the levy ceased and simplifies the calculation of the levy limit for a regular property tax levy being restored seven or more years after it ceased.

Section 9: Amends RCW 84.55.020 so that the consolidated taxing district’s first levy is based on the sum of the highest lawful levy amounts each component taxing district could have levied since 1985 rather than the most recent three years.

HB 1303 takes effect July 23, 2023, except for sections 4 and 6, which take effect January 1, 2027

HB 1355 - Updating property tax exemptions for service-connected disabled veterans and senior citizens.

This bill:

  • Increases the amount of disposable income a person can earn and be eligible for the property tax exemption (exemption program) for qualifying senior citizens, people retired due to disability, and disabled veterans for property taxes levied for collection in 2024.
  • Allows an exemption to continue if a participant’s income exceeds the minimum income threshold due to a Social Security or Supplemental Security Income cost-of-living increase in 2023.
  • Requires that the department, subject to appropriation, engage in statewide outreach to notify the public of the increased income threshold changes. This requirement expires June 30, 2024.

SHB 1355 takes effect July 23, 2023, for taxes levied for collection in 2024.

HB 1527 - Making technical corrections to the local tax increment financing program.

This bill makes technical corrections to the “local tax increment financing” (LTIF) area provisions for the funding of certain public improvements that include:

  • Defining real property for purposes of LTIF areas.
  • Clarifying certain definitions of public improvements and public improvement costs, such as the cost of acquisition of real property and appurtenant rights.
  • Clarifying the public notice requirements and when an LTIF area takes effect.
  • Creating consistency with current law by allowing taxing districts located in an LTIF area to increase their 1% property tax levy growth limit, like new construction additions, when consolidating or annexing taxing districts.

HB 1527 took effect May 9, 2023

SHB 1572 - Concerning venue for actions for the recovery of taxes.

This bill allows property tax refund lawsuits filed solely against one county to be filed in any superior court of the two nearest judicial districts to the county in which the property taxes were paid.

SHB 1572 took effect April 13, 2023.

EHB 1663 - Allowing functionally consolidated port districts to adopt a unified levy.

This bill allows two or more port districts that operate jointly through a mutual agreement under RCW 53.08.240 to levy as one joint taxing district a consolidated property tax for general port purposes authorized in RCW 53.36.020, provided the following conditions are met:

  • The port districts are adjacent, and the boundaries of the port districts are coextensive with county boundaries.
  • At least two-thirds of the commissioners of each port district vote to conduct a joint levy.
  • A majority of the voters of each port district approve the joint property tax levy at general elections within each port district on the same day.
  • The tax rate for the joint levy is the same in each participating port district.

EHB 1663 takes effect July 23, 2023. However, the earliest a joint levy may be collected by a functionally consolidated port district is calendar year 2025.

SHB 1756 - Supporting clean energy through tax changes that increase revenue to local governments, schools, and impacted communities.

This bill:

  • Provides a 10- or 15-year personal property tax exemption from the state levies for solar and wind generators, and energy storage equipment.
  • Creates an excise tax for persons claiming the personal property tax exemption created in this bill.
  • Provides a "clawback" for the full amount of the personal property tax exempted if a person fails to meet certain filing requirements for the full 10- or 15-year period of the property tax exemption. No refund of the corresponding excise tax is provided.

The exemptions are available for facilities that commence construction on or after July 1, 2023.
SHB 1756 takes effect July 23, 2023

E2SSB 5045 - Incentivizing rental of accessory dwelling units to low-income households.

This bill allows a county with a population of at least 1.5 million people to create a local property tax exemption for accessory dwelling units rented to low-income households who are not family members of the property owner unless that family member is at least 60 years of age. Additional requirements for the exemption must also be met.

E2SSB takes effect July 23, 2023.

SSB 5218 - Providing a sales and use tax exemption for complex rehabilitation technology products.

This bill provides a retail sales and use tax exemption on sales and use of mobility enhancing equipment for use by a complex needs patient.

  • "Complex needs patient" means an individual with a diagnosis or medical condition that results in significant physical or functional needs and capacities (RCW 74.09.557).
  • Mobility enhancing equipment includes items such as scooters, wheelchairs, power wheelchairs, lift chairs, and walkers.

To claim an exemption, the purchaser must provide the seller with an exemption certificate, as prescribed by the department. The tax exemption applies to mobility enhancing equipment sold or used on or after August 1, 2023.

SSB 5218 takes effect July 23, 2023

SSB 5460 - Concerning collection of assessments for irrigation and rehabilitation districts.

Although this bill does not directly impact the department, the department’s Property Tax division does provide oversight and guidance to county assessors and treasurers. This bill:

  • Aligns the benefit assessment authority of an irrigation and rehabilitation district (district) more closely with other local special improvement districts.
  • Requires a district to annually determine the amount of money necessary to continue rehabilitation operations and classify property in the district in proportion to the benefits to be derived.
  • Restricts a district’s budget to an amount equal to $1.00 per $1,000 of assessed aggregate value of all the property within the district.

SSB 5460 takes effect July 23, 2023

2E2SSB 5536 - Concerning controlled substances, counterfeit substances, and legend drug possession and treatment.

This bill makes various changes to drug laws in the wake of the Blake decision. As it relates to the department, this bill:

  • Exempts real and personal property used by a nonprofit operating an approved recovery residence.
  • Limits the amount that can be charged to residents of the recovery housing to the amount needed for maintenance and operation costs of the facility.
  • Requires that the property be owned or leased by the nonprofit. If leased, the benefit of the exemption must be passed on to the nonprofit. 

2E2SSB 5536 has various effective dates. The property tax exemption is effective for taxes levied for collection in calendar years 2024 through 2033. 

SSB 5565 - Modifying tax and revenue laws by making technical corrections, clarifying ambiguities, easing compliance burdens for taxpayers, and providing administrative efficiencies.

This bill modifies tax and revenue laws by making technical corrections, clarifying ambiguities, easing compliance burdens for taxpayers, and providing administrative efficiencies. Specifically, this bill:

  • Removes the requirement that the department continue reporting annually on the progress of our efforts to partner with all cities that impose a general business license beyond the January 1, 2023, report. The work was completed in 2022.
  • Removes the requirement for claimants of the motion picture business and occupation tax credit to file an annual tax preference performance report.
  • Clarifies that when a working families tax credit payment is calculated at greater than zero but less than one cent, the payment amount is $50.
  • Clarifies that the Legislature intends for state sales and use tax exemptions to apply to local sales and use taxes in an identical manner unless explicitly stated otherwise in the law.
  • Clarifies that the enhanced food fish tax addendum is due at the same time as the combined excise tax return.
  • Clarifies that the $125,000 tax return filing relief threshold is based on the business’s annual value of products, gross proceeds of sales, or gross income of the business, from all business activities taxable under chapter 82.04 RCW.
  • Removes a reference to RCW 82.63.010, a tax preference for high technology businesses that expired, and replaces it with a standalone definition of “initiation of construction.” The definition is the same as in the expired program.
  • Removes a reference to RCW 82.60.010, which expired July 1, 2020.
  • Clarifies that repayment of deferred taxes under the Rural County Investments Deferral Program only happens if a project ceases to meet the requirements of the deferral.
  • Corrects an erroneous cross-reference to the statutory requirement for certain entities to file an annual tax performance report.
  • Replaces an erroneous reference to “county” with “country.”
  • Repeals outdated or redundant statutes:
    • The language in RCW 82.12.02088 was incorporated into RCW 82.12.0208 as subsection (7) in the 2020 housekeeping bill, ESB 5402.
    • Redundant return and payment requirements for the enhanced food fish tax in RCW 82.27.060
    • RCW 82.70.050, which was rendered obsolete by legislation that eliminated quarterly distributions from the Multimodal Transportation Account to the 23 General Fund to reimburse the General Fund for the amount of commute trip reduction credit taken.
  • Removes cross-references in statutes made erroneous by the changes above.
  • Several sections of the bill were vetoed because they were duplicative of sections in other bills that were signed into law.

SSB 5565 takes effect July 23, 2023.

SSB 5714 - Concerning payments made for property taxes or special assessments by an automated check processing service.

This bill requires county treasurers to accept property tax payments as timely and not delinquent when received by an automated check processing service or payments via the United States mail with no discernable postmark date, if received within three business days of the April 30 or October 31 property tax due dates.

SSB 5714 takes effect July 23, 2023.