This bill aims to promote housing affordability in Washington State by incentivizing the construction of "American dream homes," which are defined as owner-occupied single-family residences of 1,500 square feet or less for low-income households. The legislation introduces several new sections to various chapters of the Revised Code of Washington (RCW), establishing criteria for obtaining permits for these homes, including limits on impact and permitting fees, and requirements for maintaining affordability for a period of seven years. Additionally, it allows for the construction of these homes outside urban growth areas under certain conditions and mandates annual reporting by cities and counties on the number of permits issued.

The bill also provides financial incentives, including a distribution of state tax revenues to local governments for costs associated with permitting American dream homes, a tax credit for builders based on the selling price of these homes, and a seven-year property tax exemption for qualifying homes. The legislation outlines the process for claiming these benefits and sets expiration dates for various provisions, including a requirement for the program to be reviewed and reported on by March 1, 2036. The act is set to take effect on July 1, 2026, and applies to taxes levied for collection in 2026 and thereafter.