Bill Summary – FastDemocracy

CERTIFICATION OF ENROLLMENT
                        SUBSTITUTE HOUSE BILL 1355
                        Chapter 147, Laws of 2023
                                68th Legislature
                              2023 Regular Session
PROPERTY TAX EXEMPTION—DISABLED VETERANS AND SENIOR CITIZENS—INCOME
                             THRESHOLD
                      EFFECTIVE DATE: July 23, 2023
 Passed by the House March 2, 2023                    CERTIFICATE
   Yeas 96 Nays 0
                                        I, Bernard Dean, Chief Clerk of the
                                        House of Representatives of the
             LAURIE JINKINS             State of Washington, do hereby
 Speaker of the House of                certify   that    the   attached  is
 Representatives                        SUBSTITUTE    HOUSE   BILL   1355 as
                                        passed     by     the     House   of
                                        Representatives and the Senate on
                                        the dates hereon set forth.
 Passed by the Senate April 7, 2023
   Yeas 47 Nays 0
                                                      BERNARD DEAN
               DENNY HECK                                            Chief Clerk
 President of the Senate
 Approved April 20, 2023 2:44 PM                         FILED
                                                     April 21, 2023
                                                Secretary of State
               JAY INSLEE                       State of Washington
 Governor of the State of Washington
                           SUBSTITUTE HOUSE BILL 1355
                   Passed Legislature - 2023 Regular Session
     State of Washington         68th Legislature       2023 Regular Session
     By House Finance (originally sponsored by Representatives Wylie,
     Slatter, Orcutt, Harris, Leavitt, Orwall, Walen, Christian, Couture,
     Rule, Senn, Stokesbary, Graham, Kloba, Reed, Paul, Donaghy, Pollet,
     and Callan)
     READ FIRST TIME 02/23/23.
      AN ACT Relating to updating property tax exemptions for service-
  connected disabled veterans and senior citizens; amending RCW
  84.36.381,   84.36.383,  84.36.385,   and   84.38.020; creating  new
  sections; and providing an expiration date.
  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     Sec. 1.   RCW 84.36.381 and 2019 c 453 s 1 are each amended to
 read as follows:
     A person is exempt from any legal obligation to pay all or a
 portion of the amount of excess and regular real property taxes due
 and payable in the year following the year in which a claim is filed,
 and thereafter, in accordance with the following:
     (1)(a) The property taxes must have been imposed upon a residence
 which was occupied by the person claiming the exemption as a
 principal place of residence as of the time of filing. However, any
 person who sells, transfers, or is displaced from his or her
 residence may transfer his or her exemption status to a replacement
 residence, but no claimant may receive an exemption on more than one
 residence in any year. Moreover, confinement of the person to a
 hospital, nursing home, assisted living facility, adult family home,
 or home of a relative for the purpose of long-term care does not
 disqualify the claim of exemption if:
                                       p. 1                      SHB 1355.SL
     (i) The residence is temporarily unoccupied;
     (ii) The residence is occupied by a spouse or a domestic partner
 and/or a person financially dependent on the claimant for support; or
     (iii) The residence is rented for the purpose of paying nursing
 home, hospital, assisted living facility, or adult family home costs.
     (b) For the purpose of this subsection (1), "relative" means any
 individual related to the claimant by blood, marriage, or adoption;
     (2) The person claiming the exemption must have owned, at the
 time of filing, in fee, as a life estate, or by contract purchase,
 the residence on which the property taxes have been imposed or if the
 person claiming the exemption lives in a cooperative housing
 association, corporation, or partnership, such person must own a
 share therein representing the unit or portion of the structure in
 which he or she resides. For purposes of this subsection, a residence
 owned by a marital community or state registered domestic partnership
 or owned by cotenants is deemed to be owned by each spouse or each
 domestic partner or each cotenant, and any lease for life is deemed a
 life estate;
     (3)(a) The person claiming the exemption must be:
     (i) Sixty-one years of age or older on December 31st of the year
 in which the exemption claim is filed, or must have been, at the time
 of filing, retired from regular gainful employment by reason of
 disability; or
     (ii) A veteran of the armed forces of the United States entitled
 to and receiving compensation from the United States department of
 veterans affairs at:
     (A) A combined service-connected evaluation rating of ((eighty))
 80 percent or higher; or
     (B) A total disability rating for a service-connected disability
 without regard to evaluation percent.
     (b) However, any surviving spouse or surviving domestic partner
 of a person who was receiving an exemption at the time of the
 person's death will qualify if the surviving spouse or surviving
 domestic partner is ((fifty-seven)) 57 years of age or older and
 otherwise meets the requirements of this section;
     (4)(a) The amount that the person is exempt from an obligation to
 pay is calculated on the basis of combined disposable income, as
 defined in RCW 84.36.383.
     (b) If the person claiming the exemption was retired for two
 months or more of the assessment year, the combined disposable income
                                     p. 2                      SHB 1355.SL
 of such person must be calculated by multiplying the average monthly
 combined disposable income of such person during the months such
 person was retired by ((twelve)) 12.
     (c) If the income of the person claiming exemption is reduced for
 two or more months of the assessment year by reason of the death of
 the person's spouse or the person's domestic partner, or when other
 substantial changes occur in disposable income that are likely to
 continue for an indefinite period of time, the combined disposable
 income of such person must be calculated by multiplying the average
 monthly combined disposable income of such person after such
 occurrences by ((twelve)) 12.
     (d)(i) If the income of the person claiming the exemption
 increases as a result of a cost-of-living adjustment to social
 security benefits or supplemental security income in an amount that
 would disqualify the applicant from eligibility, the applicant is not
 disqualified but instead maintains eligibility.
     (ii) The continued eligibility under this subsection applies to
 applications for property taxes levied for collection in calendar
 year 2024.
     (e) If it is necessary to estimate income to comply with this
 subsection (4), the assessor may require confirming documentation of
 such income prior to May 31st of the year following application;
     (5)(a) A person who otherwise qualifies under this section and
 has a combined disposable income equal (([to])) to or less than
 income threshold 3 is exempt from all excess property taxes, the
 additional state property tax imposed under RCW 84.52.065(2), and the
 portion of the regular property taxes authorized pursuant to RCW
 84.55.050 and approved by the voters, if the legislative authority of
 the county or city imposing the additional regular property taxes
 identified this exemption in the ordinance placing the RCW 84.55.050
 measure on the ballot; and
     (b)(i) A person who otherwise qualifies under this section and
 has a combined disposable income equal to or less than income
 threshold 2 but greater than income threshold 1 is exempt from all
 regular property taxes on the greater of ((fifty thousand dollars))
 $50,000 or ((thirty-five)) 35 percent of the valuation of his or her
 residence, but not to exceed ((seventy thousand dollars)) $70,000 of
 the valuation of his or her residence; or
     (ii) A person who otherwise qualifies under this section and has
 a combined disposable income equal to or less than income threshold 1
                                     p. 3                      SHB 1355.SL
 is exempt from all regular property taxes on the greater of ((sixty
 thousand dollars)) $60,000 or ((sixty)) 60 percent of the valuation
 of his or her residence;
     (6)(a) For a person who otherwise qualifies under this section
 and has a combined disposable income equal (([to])) to or less than
 income threshold 3, the valuation of the residence is the assessed
 value of the residence on the later of January 1, 1995, or January
 1st of the assessment year the person first qualifies under this
 section. If the person subsequently fails to qualify under this
 section only for one year because of high income, this same valuation
 must be used upon requalification. If the person fails to qualify for
 more than one year in succession because of high income or fails to
 qualify for any other reason, the valuation upon requalification is
 the assessed value on January 1st of the assessment year in which the
 person requalifies. If the person transfers the exemption under this
 section to a different residence, the valuation of the different
 residence is the assessed value of the different residence on January
 1st of the assessment year in which the person transfers the
 exemption.
     (b) In no event may the valuation under this subsection be
 greater than the true and fair value of the residence on January 1st
 of the assessment year.
     (c) This subsection does not apply to subsequent improvements to
 the property in the year in which the improvements are made.
 Subsequent improvements to the property must be added to the value
 otherwise determined under this subsection at their true and fair
 value in the year in which they are made.
     Sec. 2.   RCW 84.36.383 and 2021 c 220 s 1 are each amended to
 read as follows:
     As used in RCW 84.36.381 through 84.36.389, unless the context
 clearly requires otherwise:
     (1) "Combined disposable income" means the disposable income of
 the person claiming the exemption, plus the disposable income of his
 or her spouse or domestic partner, and the disposable income of each
 cotenant occupying the residence for the assessment year, less
 amounts paid by the person claiming the exemption or his or her
 spouse or domestic partner during the assessment year for:
                                     p. 4                      SHB 1355.SL
     (a) Drugs supplied by prescription of a medical practitioner
 authorized by the laws of this state or another jurisdiction to issue
 prescriptions;
     (b) The treatment or care of either person received in the home
 or in a nursing home, assisted living facility, or adult family home;
     (c) Health care insurance premiums for medicare under Title XVIII
 of the social security act;
     (d) Costs related to medicare supplemental policies as defined in
 Title 42 U.S.C. Sec. 1395ss;
     (e) Durable medical equipment, mobility enhancing equipment,
 medically prescribed oxygen, and prosthetic devices as defined in RCW
 82.08.0283;
     (f) Long-term care insurance as defined in RCW 48.84.020;
     (g) Cost-sharing amounts as defined in RCW 48.43.005;
     (h) Nebulizers as defined in RCW 82.08.803;
     (i)   Medicines  of   mineral,   animal,  and   botanical  origin
 prescribed, administered, dispensed, or used in the treatment of an
 individual by a person licensed under chapter 18.36A RCW;
     (j) Ostomic items as defined in RCW 82.08.804;
     (k) Insulin for human use;
     (l) Kidney dialysis devices; and
     (m) Disposable devices used to deliver drugs for human use as
 defined in RCW 82.08.935.
     (2) "Cotenant" means a person who resides with the person
 claiming the exemption and who has an ownership interest in the
 residence.
     (3) "County median household income" means the median household
 income estimates for the state of Washington by county of the legal
 address of the principal place of residence, as published by the
 office of financial management.
     (4) "Department" means the state department of revenue.
     (5) "Disability" has the same meaning as provided in 42 U.S.C.
 Sec. 423(d)(1)(A) as amended prior to January 1, 2005, or such
 subsequent date as the department may provide by rule consistent with
 the purpose of this section.
     (6) "Disposable income" means adjusted gross income as defined in
 the federal internal revenue code, as amended prior to January 1,
 1989, or such subsequent date as the director may provide by rule
 consistent with the purpose of this section, plus all of the
                                     p. 5                      SHB 1355.SL
 following items to the extent they are not included in or have been
 deducted from adjusted gross income:
     (a) Capital gains, other than gain excluded from income under
 section 121 of the federal internal revenue code to the extent it is
 reinvested in a new principal residence;
     (b) Amounts deducted for loss;
     (c) Amounts deducted for depreciation;
     (d) Pension and annuity receipts;
     (e) Military pay and benefits other than attendant-care and
 medical-aid payments;
     (f) Veterans benefits, other than:
     (i) Attendant-care payments;
     (ii) Medical-aid payments;
     (iii) Disability compensation, as defined in Title 38, part 3,
 section 3.4 of the Code of Federal Regulations, as of January 1,
 2008; and
     (iv) Dependency and indemnity compensation, as defined in Title
 38, part 3, section 3.5 of the Code of Federal Regulations, as of
 January 1, 2008;
     (g) Federal social security act and railroad retirement benefits;
     (h) Dividend receipts; and
     (i) Interest received on state and municipal bonds.
     (7) "Income threshold 1" means:
     (a) For taxes levied for collection in calendar years prior to
 2020, a combined disposable income equal to ((thirty thousand
 dollars)) $30,000; ((and))
     (b) For taxes levied for collection in calendar years 2020 ((and
 thereafter)) through 2023, a combined disposable income equal to the
 greater of "income threshold 1" for the previous year or ((forty-
 five)) 45 percent of the county median household income((, adjusted
 every five years beginning August 1, 2019, as provided in RCW
 84.36.385(8))); and
     (c) For taxes levied for collection in calendar year 2024 and
 thereafter, a combined disposable income equal to the greater of
 "income threshold 1" for the previous year or 50 percent of the
 county median household income, adjusted every three years beginning
 August 1, 2023, as provided in RCW 84.36.385(8).
     (8) "Income threshold 2" means:
                                     p. 6                      SHB 1355.SL
     (a) For taxes levied for collection in calendar years prior to
 2020, a combined disposable income equal to ((thirty-five thousand
 dollars)) $35,000; ((and))
     (b) For taxes levied for collection in calendar years 2020 ((and
 thereafter)) through 2023, a combined disposable income equal to the
 greater of "income threshold 2" for the previous year or ((fifty-
 five)) 55 percent of the county median household income((, adjusted
 every five years beginning August 1, 2019, as provided in RCW
 84.36.385(8))); and
     (c) For taxes levied for collection in calendar year 2024 and
 thereafter, a combined disposable income equal to the greater of
 "income threshold 2" for the previous year or 60 percent of the
 county median household income, adjusted every three years beginning
 August 1, 2023, as provided in RCW 84.36.385(8).
     (9) "Income threshold 3" means:
     (a) For taxes levied for collection in calendar years prior to
 2020, a combined disposable income equal to ((forty thousand
 dollars)) $40,000; ((and))
     (b) For taxes levied for collection in calendar years 2020 ((and
 thereafter)) through 2023, a combined disposable income equal to the
 greater of "income threshold 3" for the previous year or ((sixty-
 five)) 65 percent of the county median household income((, adjusted
 every five years beginning August 1, 2019, as provided in RCW
 84.36.385(8))); and
     (c) For taxes levied for collection in calendar year 2024 and
 thereafter, a combined disposable income equal to the greater of
 "income threshold 3" for the previous year or 70 percent of the
 county median household income, adjusted every three years beginning
 August 1, 2023, as provided in RCW 84.36.385(8).
     (10) "Principal place of residence" means a residence occupied
 for more than six months each calendar year by a person claiming an
 exemption under RCW 84.36.381.
     (11) The term "real property" also includes a mobile home which
 has substantially lost its identity as a mobile unit by virtue of its
 being fixed in location upon land owned or leased by the owner of the
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