State Constitution and Property Taxes.
The Washington Constitution requires all taxes to be applied uniformly on property within each taxing district. However, the Legislature may exempt certain property from taxation. All real and personal property in the state is subject to the state property tax, unless specifically exempted under law. Property taxes are based on the assessed fair market value of the property. The Legislature has the power, by appropriate legislation, to exempt personal property to the amount of $15,000 for each head of family liable to assessment and taxation.
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:
The state collects two regular property tax levies for common schools. The revenue growth limit applies to both levies. Participants in thepProperty tax exemption for senior citizens and people with disabilities 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, expressed as $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.
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.
A primary residence property tax exemption is created to exempt a portion of the AV of a taxpayer's principal place of residence. The exemption amount is the greater of $100,000 or 60 percent of the county median home value as of the most recent data published by the Department of Revenue (DOR), rounded to the nearest $1,000. The DOR must adjust the percent of the median value exempted downward if part 1 and part 2 of the state school levy are expected to exceed the combined statutory maximum rate of $3.60 per $1,000 market value.
The primary residence property tax exemption cannot exceed the value of a parcel and does not apply to any local property tax levies. This tax exemption is in addition to the property tax exemption for senior citizens and people with disabilities.
The primary residence property tax exemption is limited to only one residential parcel owned in fee or by contract purchase as the claimant's principal residence. The claimant must occupy this residence for at least 184 days during the calendar year for which the exemption is being claimed. A principal residence includes:
The exemption remains in place until the property is sold, transferred, or the claimant no longer qualifies due to a change of use as a principal place of residence. The claimant is required to immediately inform the county assessor, on forms created or approved by the DOR, of any change in status affecting the claimant's entitlement to a primary residence property tax exemption. The DOR can recover taxes exempted in error by a claimant, including interest but not penalties.
The primary residence property tax exemption will be administered by the DOR and county assessors. A residential property owner, also known as a claimant, will submit a signed application by April 1 of each year to the DOR that includes the claimant's address, social security number, the property's parcel number, and any other information required by the DOR. A claimant or the claimant's designated agent or legal representative must sign the application attesting that the property for which the primary residence property tax exemption is sought is the claimant's principal place of residence. The DOR will process exemption applications and provide the county assessors with a list of claimants, parcels, and other information necessary for the assessors to incorporate eligible properties on the county tax rolls. There is an appeal process for claimants whose applications are denied.
The act requires an amendment to the Constitution and voter approval of the amendment in November 2025.
In addition, the Primary Residence Property Tax Exemption Administration Account is created. Funding for the account is provided by an appropriation from the Legislature and must be distributed to counties to assist in the cost of administering the exemption. A county will receive $10 per application for the initial year exemptions, and $5 for each application in subsequent years. A county must segregate the state funds distributed to the county for the administration of the primary residence exemption program into a separate account to be used exclusively by county assessors to administer the program.
The act applies to state property taxes levied for collection in calendar year 2028 and thereafter.
The act is exempt from the requirements of a TPPS, a JLARC review, and the automatic 10-year expiration.