Counties and cities may impose impact fees on development activity as part of financing public facilities needed to serve new growth and development. This financing cannot rely solely on impact fees and must provide a balance between impact fees and other sources of public funds. Impact fees may only be imposed for system improvements reasonably related to the new development, may not exceed a proportionate share of the costs of system improvements, and must be used for system improvements that will reasonably benefit the new development.
County and city ordinances imposing impact fees must conform with specific requirements. Among other obligations, these ordinances:
Retail sales taxes are imposed on retail sales of most articles of tangible personal property, digital products, and some services. If retail sales taxes were not collected when the user acquired the property, digital products, or services, then use taxes apply to the value when used in this state. The state, most cities, and all counties levy retail sales and use taxes. The state sales and use tax rate is 6.5 percent. Local sales and use tax rates vary depending on the location.
Washington's major business tax is the business and occupation (B&O) tax. B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business. A taxpayer may have more than one B&O tax rate, depending on the types of activities conducted.
Until December 31, 2033, a person may request a permit for an American Dream Home to encourage development of single family housing for low-income households. An American Dream Home is an owner-occupied single-family residential detached dwelling of 1700 square feet or less serving low-income households. Low-income household means a single person, family, or unrelated persons living together whose adjusted income is less than 80 percent of the median family income for the city or county where the project is located.
A permit for a new American Dream Home must be approved in a city or county if:
A city or county may authorize the siting of an American Dream Home outside the urban growth area and may authorize the extension of public facilities and utilities to serve residential building sites for American Dream Homes.
A city or county may receive a distribution equal to the state portion of the sales and use tax for labor and services rendered during the construction of American Dream Homes. The Department of Revenue must remit qualifying amounts at least annually to cities and counties.
The builder of an American Dream Home is allowed an annual credit against the B&O tax. The credit equals 4 percent of the gross selling price of the home and may be taken through June 30, 2033. The credit may be carried over until used, but no credits can be claimed after June 30, 2034.
The value of an American Dream Home is exempt from property taxation for a period of 12 years beginning January 1st of the year immediately following the calendar year in which construction of the American Dream Home is completed. The exemption applies to both the value of new construction and the underlying land.
By March 1, 2033, a city or county must report to the Department of Commerce the number of American Dream Home permits issued in its jurisdiction. The Department of Commerce must compile the data and program participation by jurisdiction and report it to the Legislature.