This bill aims to promote housing affordability in Washington 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 low-income households for seven years after the initial sale. Additionally, it allows cities and counties to report annually on the number of permits issued and provides definitions for terms such as "affordable" and "low-income household."

The bill also includes provisions for tax incentives, such as a four percent credit against certain taxes for builders of American dream homes, and a seven-year property tax exemption for these homes upon completion. It mandates that cities and counties receive a distribution of state taxes related to the construction of these homes to offset permitting costs. The act is set to take effect on July 1, 2026, and includes expiration dates for various provisions, with the intent to appropriate funds for down payment assistance and to reimburse local governments for revenue losses associated with the program.