The bill introduces a new local government option for funding essential affordable housing programs by allowing counties, cities, and towns in Washington to impose a special excise tax on short-term rental lodging. This tax, which cannot exceed four percent, applies specifically to rentals facilitated through short-term rental platforms. The legislation mandates that any tax imposed must allow for a credit against any city or town tax on the same taxable event, and the proceeds from this tax will be deposited into an essential affordable housing local assistance account. The funds collected can be used for various purposes, including acquiring or rehabilitating affordable housing, providing rental assistance, and supporting social service organizations.

Additionally, the bill amends existing laws to clarify the tax rates and conditions under which municipalities can impose lodging taxes. It specifies that the combined tax rate for lodging should not exceed certain thresholds and includes provisions for reporting on the use of tax revenues. The bill also establishes that the new tax cannot be imposed before April 1, 2026, and outlines the administrative processes that will apply to the local option tax. Overall, the legislation aims to enhance funding for affordable housing initiatives while providing local governments with the flexibility to generate revenue through short-term rental taxes.

Statutes affected:
Original Bill: 67.28.181, 82.14.410, 82.32.145
Substitute Bill: 64.37.010, 82.14.410
Engrossed Substitute: 64.37.010, 82.14.410