Retired Persons Property Tax Relief Program.  Authorized by a constitutional amendment, qualifying senior citizens, persons retired due to disability, and qualifying veterans are entitled to property tax relief on their primary residence (SPTE).  To qualify for the SPTE, a person must be any of the following:

• at least 61 years of age;
• at least 57 years of age and the surviving spouse or domestic partner of a person who was an exemption participant at the time of their death;
• unable to work because of a disability; or
• a disabled veteran with a service-connected evaluation of at least 80 percent or receiving compensation from the United States Department of Veterans Affairs at the 100 percent rate for a service-connected disability.

 
The home must be owned and be the primary residence of the applicant.  An applicant's combined disposable income must be under the county's income threshold to qualify.  Eligible individuals qualify for a partial property tax exemption and a valuation freeze.
 
The partial property tax exemption for the SPTE is provided according to various income thresholds.  The income thresholds and associated partial exemptions are as follows:

• income threshold one is the greater of income threshold one for the previous year or 45 percent of county median household income;
  • applicants qualifying under this income threshold receive an exemption from all excess levies, the additional state levy part two, and regular levies on the greater of $60,000 or 60 percent of the assessed valuation;
• income threshold two is the greater of income threshold two for the previous year or 55 percent of county median household income;
  • applicants qualifying under this income threshold but above income threshold one, receive an exemption from all excess levies, the additional state levy, and regular levies on the greater of $50,000 or 35 percent of assessed valuation with a $70,000 maximum; and
• income threshold three is the greater of income threshold three for the previous year or 65 percent of county median household income; and
  • applicants qualifying under this income threshold but above income threshold two receive an exemption from all excess levies and the additional state levy.

 
The income thresholds are adjusted every five years to reflect the most recent year of estimated county median household incomes published by the Office of Financial Management.  Beginning with the adjustment made by March 1, 2024, and every second adjustment thereafter, if an income threshold in a county is not adjusted based on percentage of county median income, then the income threshold must be adjusted based on the growth of the seasonally adjusted consumer price index for all urban consumers for the prior 12-month period, published by the United States Bureau of Labor Statistics, with a limit of 1 percent.
 
Cities and counties are permitted to exempt participants in the property tax exemption program from any portion of their regular property tax levy attributable to a levy lid lift, with voter approval.
 
In addition to the partial exemptions listed above, the valuation of the residence of an eligible individual is frozen, for calculating property tax liability, at the assessed value of the residence on the later of January 1, 1995, or January 1st of the assessment year in which the person first qualifies for the program.  To be eligible, the person must have a disposable income less than income threshold three.

Property Tax Statements.  County assessors send out a property tax statement annually either by mail, or if a taxpayer has signed up for electronic billing, by email. The statement includes property tax information, including the amount of taxes collected for each of the districts in which a property owner's property is located. Tax statements are mailed in mid-February.  The state property tax levy, which is dedicated to K-12 education, consists of two parts and each part is often referred to as part I and part II.  

Retired Persons Property Tax Relief Program. Property owners qualifying under the SPTE program are exempt from 100 percent of part one of the state levy.

The qualifying income threshold percentages are increased by 10 percent.   The qualifying income threshold percentage for the deferral program is increased by 15 percent. 

The amount of assessed value used in determining the amount of regular property tax relief under income thresholds 1 and 2 are increased as follows:

• applicants qualifying under income threshold 1 receive an exemption from regular levies on the greater of $80,000 or 80 percent of the assessed valuation with a $500,000 maximum; and
• applicants qualifying under income threshold 2 receive an exemption regular levies on the greater of $70,000 or 75 percent of assessed valuation with a $200,000 maximum.

A standard deduction option is provided for determining combined disposable income equal to $7,500 for individuals and an additional $7,500 for spouses and domestic partners.

Combat-related special compensation is excluded from the determination of disposable income.

The changes to the exemption do not expire and is not subject to review by the Joint Legislative Audit and Review Committee.

State Property Tax Rate Consolidation.  Parts 1 and 2 of the state levy are consolidated into a single, integrated state property tax. For calendar year 2026, the consolidated rate is set at an an amount that would reflect the reduction in revenues from exempting part 1of the state levy in the senior citizen property tax relief program but is otherwise revenue neutral. 

The retired person property tax relief program is expanded by:

• increasing the qualifying income thresholds—including the threshold used under the retired person deferral program, and increasing the amount of assessed value that is used in determining the amount of property tax relief; 
• providing a standard deduction option for determining combined disposable income equal to $7,500 for individuals and an additional $7,500 for spouses and domestic partners; and
• excluding combat-related special compensation from the determination of disposable income.

Property Tax Statements. Tax statements must identify each part of the state property tax as the state school levy-part 1and state school levy-part 2. 

• Removes the provisions of the bill increasing the property tax growth limit for the state and local governments. 
• Consolidates part 1 and part 2 of the state levy into a single, integrated property tax and then sets the consolidated rate in calendar year 2026 at an amount that would reflect the reduction in revenues from exempting part 1 of the state levy in the senior citizen property tax relief program but is otherwise revenue neutral. 
• Expands the retired person property tax relief program by:
1. increasing the qualifying income thresholds—including the threshold used under the retired person deferral program, and increasing the amount of assessed value that is used in determining the amount of property tax relief; 
2. providing a standard deduction option for determining combined disposable income equal to $7,500 for individuals and an additional $7,500 for spouses and domestic partners; and
3. excluding combat-related special compensation from the determination of disposable income.

The committee recommended a different version of the bill than what was heard.  PRO:  The 1 percent tax cap, now 20 years old, means city revenues cannot keep up with the demand for services including police officers and roads.  The bill does not automatically increase property taxes, but provides flexibility for local governments to decide if revenues are needed.  The 1 percent limit does not reflect the reality for providing services, for example in public safety.  Appreciate the support for fire services. 

Communities are facing significant budget shortfalls and are unable to provide critical services.  Population growth has resulted in cost increases far exceeding revenues.  This change would allow the revenue to increase to fit the needs of residents.  Costs are growing 4 percent to 5 percent per year, while revenues are increasing 1 percent per year. 

Roads and law enforcement are the largest expense, and property tax revenues are not keeping pace.  The tax increase allowed in the bill will result in approximately $12 per year for the average home.  Rural areas struggle to meet the needs of their citizens, and additional revenue could be used to support critical services in those rural communities.  Park usage has increased, and revenues have not been sufficient to maintain those parks. The 1 percent limit creates structural budget shortfalls.  School districts are facing budget deficits.  In certain rural communities, property taxes are a large proportion of their budget.  The bill does not triple property taxes.  Public defense caseloads are too high and more resources are needed to support counties.  Wage increases have exceeded revenues, resulting in the need to reduce public safety staff.  County prosecutors have higher caseloads, staff turnover, and burnout.

CON:  Sixty percent of voters passed this protection, and 89 percent of legislators reenacted it, and tripling the amount that local governments can increase property taxes every year will tax people out of their homes. Governments can get more revenue with voter approval.  Indexing by inflation will result in huge increases.   The bill will be a regressive tax and impact housing projects.  Lifting the cap on tax will increase rents.  Middle class families cannot afford higher property taxes, and getting in to the housing market is nearly impossible. The ability to increase taxes in the bill is too broad and cuts out voter oversight.  Operational cost increases will be passed on to renters and investment uncertainty in development, resulting in unintended consequences. 

Washington has a housing crisis, so would should not increase property taxes.  Some counties have already increased taxes beyond 1 percent.  Retirees cannot afford increases, and spending must be controlled.  On fixed income, if property taxes increase, people will be taxed out of their home.  Citizens votes should be required to approve taxes.  Seniors on fixed income cannot afford property tax increases.  This is a spending problem, not a revenue problem.  A large number of people have signed in against this property tax increase.  The bill does not address wasteful spending.  Home ownership is key to building wealth and financial stability, and many residents cannot afford to buy a home. 

This will impact local small businesses by increasing costs.  Washington State is ranked 45th on taxes overall, and with the proposals being considered will move Washington further down the ranking.  Washington businesses pay a high burden of taxes compared to neighboring states.  Increased property taxes impacts housing affordability. The 1percent cap has helped to make housing affordable over the years.