The bill amends existing tax laws to allow counties with populations of 1,500,000 or more, as well as cities or counties with populations between 900,000 and 1,500,000, to exempt the value of accessory dwelling units (ADUs) from taxation, provided certain conditions are met. These conditions include that the improvement must represent 30% or less of the original structure's value, the unit must be rented to low-income households, and the taxpayer must submit an affidavit verifying the tenant's income. Additionally, the bill requires that the exemption be applied for annually and includes provisions for counties to establish policies to assist tenants when the exemption expires.

The legislation also includes a performance statement for evaluating the tax preferences associated with the exemption, emphasizing the goal of increasing the availability of affordable housing by encouraging homeowners to rent ADUs to low-income households. A review by the joint legislative audit and review committee is mandated to assess the costs and benefits of the exemption program, with a final report due by December 1, 2027. The act is set to expire on January 1, 2034, and applies to taxes levied for collection in 2026 and thereafter.

Statutes affected:
Original Bill: 84.36.400
Engrossed Bill: 84.36.400
Bill as Passed Legislature: 84.36.400
Session Law: 84.36.400