Property Tax—Regular Levies.
All real and personal property is subject to a tax each year based on the highest and best use, unless a specific exemption is provided by law. The annual growth of all regular property tax levy revenue is limited as follows:
An additional amount is added on based on the increase in assessed value in a district from:
The state collects two regular property tax levies for common schools. The revenue growth limit applies to both levies. Participants in the senior citizens, individuals with disabilities, and qualifying veterans property tax exemption program receive a partial exemption from the original state levy and a full exemption from the additional state levy.
The Washington Constitution also limits regular levies to a maximum of 1 percent of the property's value, or $10 per $1,000 of assessed value. There are individual district rate maximums and aggregate rate maximums to keep the total tax rate for regular property taxes within the constitutional limit, for example:
For property tax purposes, the state, counties, and cities are collectively referred to as senior taxing districts. Junior taxing districts—a term that includes fire, hospital, flood control zones, and most other special purpose districts—each have specific rate limits as well.
Prorationing and "The Gap."
The tax rates for senior and junior taxing districts, excluding the state, must fit within an overall rate limit of $5.90 per $1,000 of assessed value. If the statutory $5.90 or constitutional $10 limit are exceeded, statute establishes the sequential order in which the levies must be proportionally reduced or eliminated, a process referred to as prorationing, to conform to the statutory and constitutional limits.
Some regular property tax levies—including levies for criminal justice purposes, port districts, and emergency medical services—are subject to the $10 constitutional limit but not the $5.90 aggregate rate limit. These levies have protections from general prorationing requirements and exist within the "gap" that remains after subtracting the state levy and the $5.90 in local regular levies from the constitutional $10 limit per $1,000 of assessed value.
Property Tax—Excess Levies.
Excess levies are imposed in addition to regular levies and are not subject to the constitutional $10 limit. Taxing jurisdictions with excess levy authority include local school districts, public facilities districts, and transportation benefit districts. Most excess levies require a 60 percent voter approval. Local school district levies for operation, transportation, and capital projects require simple majority voter approval.
Levy Lid Lift.
Voters may approve regular property tax increases above the revenue growth limit. This voter-approved increase is referred to as a levy lid lift. A levy lid lift may be authorized for a single year or for multiple years, not to exceed six years. A multiyear lid lift must be for a specific purpose.
Personal Property Tax Exemption and Production Excise Tax.
Beginning with tax levied for collection in calendar year 2025, all qualified personal property owned by an eligible taxpayer and used for the generation of renewable energy is exempt from the state property tax levy.
The term "qualified personal property" means personal property that is used exclusively for the generation or storage of renewable energy in a facility, the construction of which began on or after July 1, 2023.
The term "renewable energy" means energy produced by a solar or wind facility with nameplate capacity sufficient to generate at least one megawatt (MW) of nameplate capacity of alternating current power.
Eligible taxpayers granted a personal property tax exemption are subject to a production excise tax for the privilege of using qualified renewable energy generating systems as an electric power source in Washington. The production excise tax rates are:
Energy Facility Siting.
The Energy Facility Site Evaluation Council (EFSEC) was established in 1970 to provide a single siting process for major energy facilities. The EFSEC coordinates all evaluation and licensing steps for siting certain energy facilities, and specifies the conditions of construction and operation. After evaluating an application, the EFSEC submits a recommendation either approving or rejecting an application to the Governor, who makes the final decision on site certification. If approved by the Governor, a site certification agreement is issued in lieu of any other individual state or local agency permits.
The laws that require or allow a facility to seek certification through the EFSEC process apply to the construction, reconstruction, and enlargement of energy facilities, biorefineries, and electrical transmission facilities, with many specifications. Energy facilities of any size that exclusively use alternative energy resources, such as wind or solar energy, may opt in to the EFSEC review and certification process. Energy facilities that exclusively use alternative energy resources and choose not to opt in to the EFSEC review and certification process must instead receive applicable state and local agency development and environmental permits for their projects directly from each agency.
State Environmental Policy Act.
The State Environmental Policy Act (SEPA) establishes a review process for state and local governments to identify environmental impacts that may result from governmental decisions, such as the issuance of permits or the adoption of land use plans. The Department of Ecology (Ecology) has adopted rules that spell out the elements of the environment whose impacts must be considered in a SEPA checklist and any subsequent SEPA environmental review. If an initial review of the checklist and supporting documents results in a determination that the government decision has a probable significant adverse environmental impact, known as a threshold determination, the proposal must undergo a more comprehensive environmental analysis in the form of an environmental impact statement. If the SEPA review process identifies significant adverse environmental impacts, the lead agency may deny a government decision or may require mitigation for identified environmental impacts. Regardless of whether an energy facility seeks EFSEC certification or local agency development and environmental permits, lead agency decisions regarding the facility are subject to environmental review requirements under SEPA unless exempted from SEPA review.
Tribal Capacity Grants.
In the 2023-2025 biennium, $21 million was appropriated for a grant program, administered by Ecology, to support consultation involving federally recognized Indian tribes related to funding decisions for projects and activities funded with Climate Commitment Act (CCA) revenues, and related clean energy siting activities. Money to fund this program was appropriated from the Climate Investment Account, one of the seven accounts created to receive CCA revenues.
Tax Preference Performance Statement.
Tax preferences confer reduced tax liability upon a designated class of taxpayers. These include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits. There are over 700 tax preferences. Legislation that establishes or expands a tax preference must include a tax preference performance statement (TPPS) that identifies the public policy objective of the preference, as well as specific metrics that the Joint Legislative Audit and Review Committee (JLARC) can use to evaluate the effectiveness of the preference. All new tax preferences automatically expire after 10 years unless an alternative expiration date is provided.
Renewable Energy Excise Tax.
Personal Property Tax Exemption.
All personal property used exclusively for the generation of renewable energy in a qualified energy facility that becomes operational on or after January 1, 2028, or is repowered on or after January 1, 2028, is exempt from property tax beginning in calendar year 2028. In addition, all personal property used exclusively for a battery electric storage system is exempt from property tax beginning in calendar year 2029.
A qualified renewable energy facility is a solar or wind facility with nameplate capacity sufficient to generate at least 10 MW of alternating current power. It does not include renewable energy facilities owned or operated by centrally assessed utilities or by joint operating agencies that make payments in lieu of taxes.
"Battery electric storage systems" means commercially available technology that is capable of retaining electricity, storing the energy for a period of time, and delivering the electricity after storage by chemical, thermal, mechanical, or other means that has at least 10 MW of storage. It does not include any form of hydroelectric power. "Battery electric storage systems" does not include systems owned or operated by centrally assessed utilities or by joint operating agencies that make payments in lieu of taxes.
Repowered means the cumulative rebuild or refurbishment of a majority, or more than half the nameplate capacity, of the wind or solar energy facility due to the facility reaching the end of its useful life or useful reasonable economic life. The rebuild or refurbishment does not constitute repowering if it is part of routine major maintenance or the maintenance of or replacement of equipment that does not materially affect the expected physical or economic life of the facility. Repowering, rebuilds, and refurbishments must be reported to the county assessor as they occur. If a facility or system has undertaken repowering, rebuilds, or refurbishment prior to the effective date of this act, then this must be reported to the county assessor within 90 days of the effective date of the act.
Beginning January 1, 2028, the property tax levy calculation for all taxing districts will not include an increase in assessed value due to the construction of wind turbine and solar facilities.
Each qualified renewable energy facility must file an annual report with the Department of Revenue (DOR) by March 15 that provides the location by tax code area and nameplate capacity of the exempt personal property. The DOR must provide a copy of the report to the appropriate county treasurers and county assessors. An exemption to prohibitions on disclosure of taxpayer information is provided to allow the DOR to share with local taxing officials, including county treasurers and assessors, the identity and tax information of taxpayers subject to the renewable energy (RE) tax.
New Renewable Energy Tax Rates.
Beginning January 1, 2028, a state RE tax is imposed on qualified renewable energy systems that become operational on or after January 1, 2028, or are repowered on or after January 1, 2028, and on battery electric storage systems that are operational or repowered on or after January 1, 2028. These rates apply for the life of the facility or system. In addition, the legislative body of a county may impose a local RE tax on these systems:
The local RE taxes must be paid in two equal payments due April 30 and October 31 each year. The county treasurer must apportion and distribute the revenues from the local RE tax to each local taxing district in a manner that reflects the pro rata share of the property tax rate in the prior tax year.
The state RE tax is due monthly and must be deposited into the newly created Local Investment Distribution Account.
Opt-in Provisions.
Renewable energy facilities and battery electric storage systems that commence operation or repower after July 1, 2026, but before January 1, 2028, may opt into the RE tax if:
If a renewable energy facility and battery electric storage system opts into the RE tax and receives a personal property tax exemption, then the local property taxes must be reduced as necessary to prevent the exemption from resulting in a higher tax rate than would have occurred in the absence of the exemption.
Renewable energy facilities and battery electric storage systems that submitted a completed application under SEPA as of November 2025, and are in operation after July 1, 2026, but before December 31, 2034, may opt into the RE tax at any point. Renewable energy facilities and battery electric storage systems in operation after January 1, 2028, that have not submitted an application under SEPA are automatically subject to the RE tax. Renewable energy facilities and battery electric storage systems in operation for at least 25 years since the facility or system began operation or last repowered may opt into the RE tax. Renewable energy facilities and battery electric storage systems that do not otherwise opt in are automatically subject to the RE tax after 35 years in operation, starting from the date on which the facility or system commenced operation or last repowered.
The renewable energy facility or the battery electric storage system must notify the DOR and the county assessor of its intent to opt in by April 30. The assessment of RE taxes and the personal property tax exemption begin on January 1 of the following calendar year.
Special Local Renewable Energy Tax.
Beginning January 1, 2031, the legislative authority of a county may impose a special local RE tax if a local taxing district within the county imposes an excess levy. The rate is calculated by multiplying the applicable local RE tax rate by the excess levy increment. The excess levy increment is calculated by dividing the amount of the applicable excessive levy in dollars by the applicable county and junior taxing district property levies in dollars. If there is a single excess levy, the levy increment cannot exceed 5 percent, or if there are multiple excess levies, the total levy increment cannot exceed 10 percent. The proceeds of the special local RE tax will go to the taxing district or districts that have imposed the excess levy and will expire when the excess levy expires.
Joint Legislative Audit and Review Committee and Department of Revenue Report.
The JLARC must review the state and local RE tax rates, including a comparison of the economic and tax environments for these systems in other states, and make recommendations about adjusting rates for when new systems come online. This report is due to the Legislature by October 31, 2031.
The DOR will administer the new RE tax and may engage in any necessary rulemaking.
Proceeds of Renewable Energy Excise Tax.
The state portion of the RE tax revenue must be deposited into the newly created Local Investment Distribution Account.
The state portion of the RE tax revenue is distributed as follows:
Local Investment Distribution Grant Program.
Commerce must establish the Local Grant Program, through which it must provide funds to each county that qualifies for the Local Grant Program in a proportion equal to the amount of state excise tax attributable to the county during the previous tax reporting period. Counties must distribute funds to local taxing districts within the county in accordance with the taxing district's relative share of the local property tax levy, except for rural counties which may elect to retain the full amount.
In order for a county to be eligible to receive funds under the Local Grant Program, the county must:
Commerce's model ordinance that a local government must have adopted or substantially adopted to be eligible for the Local Grant Program, must be developed by July 1, 2028, and address the siting, decommissioning, and provision of financial assurance for qualifying energy projects. The model ordinance must be developed in consultation with qualifying energy project developers and owners, federally recognized tribes, and stakeholders. Within six months of Commerce's adoption of the model ordinance, in order for a county to be eligible for the Local Grant Program, the county's development regulations must not contain standards that are more restrictive or burdensome than the model ordinance. Commerce must review the model ordinance under SEPA; local governments that adopt the model ordinance are exempted from SEPA review in the adoption of the model ordinance. Commerce must also provide technical assistance and ongoing liaison support to local governments, including methods and best practices for siting qualifying energy projects.
The development regulations that must be adopted by a local government to qualify for the Local Grant Program must require a qualifying energy project developer to:
The development regulations must also allow the county to condition an application by a qualifying energy project developer in accordance with a plan agreement with the DAHP or a federally recognized tribe.
A qualifying energy project is not rendered ineligible for the Local Grant Program on the basis of being located in a jurisdiction that imposes requirements, standards, or restrictions on qualifying energy projects that are consistent with the permit requirements, guidelines, or best practices for the siting, development, or operation of qualifying energy facilities imposed by a state agency or state law. In addition, a qualifying energy project is not rendered ineligible for the Local Grant Program on the basis of mitigation being imposed as a result of an environmental review by the EFSEC or under the SEPA.
Capacity Grants to Federally Recognized Indian Tribes.
Ecology must implement a biennial Capacity Grant Program to each federally recognized Indian tribe in Washington or with treaty-ceded lands in Washington. The grants under this program must be awarded equally among applicants.
The capacity grant may be used at the discretion of each tribe, in a manner that recognizes their sovereignty, for:
Participation in the Capacity Grant Program and the receipt of the grant moneys does not limit the authority of a tribe to administratively object to or legally appeal a qualifying energy project or project component. The eligibility of a tribe for capacity grants is not affected if they file an objection or appeal.
Technical Provisions.
The production excise tax enacted in 2023 is repealed, as is the accompanying personal property tax exemption.
The new personal property tax exemption for qualifying renewable energy facilities is exempt from the requirement of a TPPS, a JLARC review, and an automatic 10-year expiration.
| House | 74 | 15 | |
|---|---|---|---|
| Senate | 42 | 6 | (Senate amended) |
| House | 86 | 9 | (House concurred) |
| Effective: | January 1, 2028 |
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