SB 5798 — Concerning property tax reform.

RCW 84.55.0101 and 2007 sp.s.

c 1 s 2 are each amended to read as follows:

(1) Upon a finding of substantial need, the legislative authority of a ((taxing district other than the state may provide for the use of a limit factor under this chapter of one hundred one percent or less.

In districts with legislative authorities of four members or less, two-thirds of the members must approve an ordinance or resolution under this section.

In districts with more than four members, a majority plus one vote must approve an ordinance or resolution under this section.

The new limit factor shall be effective for taxes collected in the following year only)) county, city, or town, with respect to its current expense levy, may provide for the use of a limit factor of 100 percent plus population change and inflation.

The finding of substantial need must include a legislatively declared determination by the county, city, or town that the estimated increase in expenditures for public safety, criminal justice, and community protection services will exceed the estimated increase in available resources for those purposes.

(2) For the purpose of this section, "public safety, criminal justice, and community protection services" means public safety, criminal justice, mental health, chemical dependency, emergency medical, domestic violence, and all other services eligible for funding under RCW 82.14.320, 82.14.340, 82.14.450, 82.14.460, and 84.52.069.

"Public safety, criminal justice, and community protection services" also includes activities or the provision of services related to:

The district and superior courts, court clerks, prosecutors, victim and witness services, and code enforcement.

PART II EXEMPTING ALL PARTICIPANTS IN THE PROPERTY TAX RELIEF PROGRAM FOR RETIRED PERSONS FROM ALL OF PART I OF THE STATE LEVY Sec.

201.

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 andp. payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:

4 SB 5798 and payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:

However, any person who sells, transfers, or is displaced from his or her residence may transfer his or her exemption status to a replacement p.residence, but no claimant may receive an exemption on more than one residence in any year.

1 SSB 5798 residence, but no claimant may receive an exemption on more than one residence in any year.

or (B)p. A total disability rating for a service-connected disability without regard to evaluation percent.

5 SB 5798 (B) A total disability rating for a service-connected disability without regard to evaluation percent.

p.(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.

2 SSB 5798 (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.

(5)(a) A person who otherwise qualifies under this section and has a combined disposable income equal to or less than income threshold 3 is exempt from all excess property taxes, the ((additional))additional state property tax imposed under RCW 84.52.065(((2))),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 cityp. imposing the additional regular property taxes identified this exemption in the ordinance placing the RCW 84.55.050 measure on the ballot;

and6 (b)(i)SB A5798 personcity whoimposing otherwisethe qualifiesadditional underregular thisproperty sectiontaxes andidentified hasthis aexemption combinedin disposablethe incomeordinance equalplacing tothe orRCW less84.55.050 thanmeasure income threshold 2 but greater than income threshold 1 is exempt from all regular property taxes on the greaterballot; of (($50,000)) $70,000 or p.

3((and)) SSB(b)(i) 5798A ((35))person 45who 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 $50,000 or 35 percent of the valuation of his or her residence, but not to exceed (($70,000))$70,000 $200,000 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 is exempt from all regular property taxes on the greater of (($60,000))$60,000 $80,000 or ((60))60 80 percent of the valuation of his or her residence , but not to exceed $500,000 of the valuation of his or her residence;

and (c)(i) A person who qualifies under (a) of this subsection (5) is exempt from 100 percent of the assessed value for state property taxes imposed under RCW 84.52.065(1).

(ii) The exemption provided under (c)(i) of this subsection is applied to the assessed value remaining after all other exemption adjustments have been made under this section;

Subsequent improvements to the property must be added to the value otherwisep. determined under this subsection at their true and fair value in the year in which they are made.

7 SB 5798 otherwise determined under this subsection at their true and fair value in the year in which they are made.

NEW SECTION.

102.202.

RCWA 84.36.383new andsection 2024is cadded 119to schapter 184.55 areRCW each amended to read as follows:

As(1) usedNotwithstanding the limitations set forth in RCW 84.36.38184.55.010, throughstate 84.36.389,property unlesstaxes under RCW 84.52.065(1) levied for collection in calendar year 2026 must be reduced as necessary to prevent the contextexemption clearlycreated requiresunder otherwise:section 201, chapter .

(1)., "AccessoryLaws dwellingof unit"2025 means(section 201 of this act) from resulting in a separate,higher autonomoustax residentialrate dwellingthan unitwould thathave providesoccurred completein independentthe livingabsence p.of the exemption.

4(2) SSBNotwithstanding 5798the facilitiesmost forrecent onethree-year orperiod morerequirement personsspecified andin includesRCW permanent84.55.010(1), provisionsstate property taxes under RCW 84.52.065(1) levied for living,collection sleeping,in eating,calendar cooking,years 2027 and sanitation.2028 may not exceed the limit factor multiplied by the amount levied under this chapter in the prior year plus the increases specified under RCW 84.55.010(1) (a) through (e).

(2)PART "CombinedIII disposableREQUIRING income"PROPERTY meansTAX theSTATEMENTS disposableTO incomeLIST ofTHE theSTATE personPROPERTY claimingTAX theAS exemption,THE plusSTATE theSCHOOL disposableLEVY incomeSec. of his or her spouse or domestic partner, and the disposable income of each cotenant occupying the residence for the assessment year, less the standard deduction amount or amounts paid by the person claiming the exemption or his or her spouse or domestic partner during the assessment year for the items in this subsection (2).

In301. determining combined disposable income, the person claiming the exemption may choose to use the standard deduction amount or the total itemized amount of the following items:

(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.

(3) "Cotenant" means a person who resides with the person claiming the exemption and who has an ownership interest in the residence.

(4) "County median household income" means the median household income estimates for the state of Washington by county of the legal p.

5 SSB 5798 address of the principal place of residence, as published by the office of financial management.

(5) "Department" means the state department of revenue.

(6) "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.

(7) "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 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;

and (v) Combat-related special compensation under 10 U.S.C.

Sec.

1413a;

(g) Federal social security act and railroad retirement benefits;

(h) Dividend receipts;

and (i) Interest received on state and municipal bonds.

(8) "Income threshold 1" means:

(a) For taxes levied for collection in calendar years prior to 2020, a combined disposable income equal to $30,000;

(b) For taxes levied for collection in calendar years 2020 through 2023, a combined disposable income equal to the greater of p.

6 SSB 5798 "income threshold 1" for the previous year or 45 percent of the county median household income;

((and)) (c) For taxes levied for collection in calendar years 2024 ((and thereafter)) through 2026, 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)));

and (d) For taxes levied for collection in calendar years 2027 and thereafter, a combined disposable income equal to the greater of "income threshold 1" 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 2" means:

(a) For taxes levied for collection in calendar years prior to 2020, a combined disposable income equal to $35,000;

(b) For taxes levied for collection in calendar years 2020 through 2023, a combined disposable income equal to the greater of "income threshold 2" for the previous year or 55 percent of the county median household income;

((and)) (c) For taxes levied for collection in calendar years 2024 ((and thereafter)) through 2026, 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)));

and (d) For taxes levied for collection in calendar years 2027 and thereafter, a combined disposable income equal to the greater of "income threshold 2" 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) "Income threshold 3" means:

(a) For taxes levied for collection in calendar years prior to 2020, a combined disposable income equal to $40,000;

(b) For taxes levied for collection in calendar years 2020 through 2023, a combined disposable income equal to the greater of "income threshold 3" for the previous year or 65 percent of the county median household income;

((and)) (c) For taxes levied for collection in calendar years 2024 ((and thereafter)) through 2026, a combined disposable income equal to the greater of "income threshold 3" for the previous year or 70 percent p.

7 SSB 5798 of the county median household income((, adjusted every three years beginning August 1, 2023, as provided in RCW 84.36.385(8)));

and (d) For taxes levied for collection in calendar years 2027 and thereafter, a combined disposable income equal to the greater of "income threshold 3" for the previous year or 80 percent of the county median household income, adjusted every three years beginning August 1, 2023, as provided in RCW 84.36.385(8).

(11) "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.

(12) 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 mobile home and placed on a foundation (posts or blocks) with fixed pipe, connections with sewer, water, or other utilities.

A mobile home located on land leased by the owner of the mobile home is subject, for tax billing, payment, and collection purposes, only to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.

(13) The term "residence" means a single-family dwelling unit whether such unit be separate or part of a multiunit dwelling, may include one accessory dwelling unit and includes the land on which such dwellings stand not to exceed one acre, except that a residence includes any additional property up to a total of five acres that comprises the residential parcel if this larger parcel size is required under land use regulations.

The term also includes a share ownership in a cooperative housing association, corporation, or partnership if the person claiming exemption can establish that his or her share represents the specific unit or portion of such structure in which he or she resides.

The term also includes a single-family dwelling situated upon lands the fee of which is vested in the United States or any instrumentality thereof including an Indian tribe or in the state of Washington, and notwithstanding the provisions of RCW 84.04.080 and 84.04.090, such a residence is deemed real property.

(14) "Standard deduction amount" means $7,500 for the person claiming the exemption plus an additional $7,500 for the person's spouse or domestic partner.

p.

8 SSB 5798 Sec.

103.

RCW 84.38.020 and 2023 c 147 s 4 are each amended to read as follows:

The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1)(a) "Claimant" means a person who either elects or is required under RCW 84.64.050 to defer payment of the special assessments and/or real property taxes accrued on the claimant's residence by filing a declaration to defer as provided by this chapter.

(b) When two or more individuals of a household file or seek to file a declaration to defer, they may determine between them as to who the claimant is.

(2) "Devisee" has the same meaning as provided in RCW 21.35.005.

(3) "Equity value" means the amount by which the fair market value of a residence as determined from the records of the county assessor exceeds the total amount of any liens or other obligations against the property.

(4) "Heir" has the same meaning as provided in RCW 21.35.005.

(5) "Income threshold" means:

(a) For taxes levied for collection in calendar years prior to 2020, a combined disposable income equal to $45,000;

((and)) (b) for taxes levied for collection in calendar year 2020 ((and thereafter)) through 2026, a combined disposable income equal to the greater of the income threshold for the previous year, or 75 percent of the county median household income;

and (c) for taxes levied for collection in calendar year 2027 and thereafter, a combined disposable income equal to the greater of the income threshold for the previous year, or 90 percent of the county median household income, adjusted every three years beginning August 1, 2023, as provided in RCW 84.36.385(8).

Beginning with the adjustment made by August 1, 2023, as provided in RCW 84.36.385(8), if the income threshold in a county is not adjusted based on percentage of county median income as provided in this subsection, then the income threshold must be adjusted based on the growth of the consumer price index for all urban consumers (CPI-U) for the prior ((twelve)) 12- month period as published by the United States bureau of labor statistics.

In no case may the adjustment be greater than one percent.

The adjusted threshold must be rounded to the nearest one dollar.

If the income threshold adjustment is negative, the income threshold for the prior year continues to apply.

(6) "Local government" means any city, town, county, water-sewer district, public utility district, port district, irrigation p.

9 SSB 5798 district, flood control district, or any other municipal corporation, quasi-municipal corporation, or other political subdivision authorized to levy special assessments.

(7) "Real property taxes" means ad valorem property taxes levied on a residence in this state in the preceding calendar year.

(8) "Residence" has the meaning given in RCW 84.36.383.

(9) "Special assessment" means the charge or obligation imposed by a local government upon property specially benefited.

PART II REQUIRING PROPERTY TAX STATEMENTS TO LIST THE STATE PROPERTY TAX AS THE STATE SCHOOL LEVY Sec.

201.

Taxp. statements.

8 SB 5798 Tax statements.

and p.(iii) The county assessor has delivered the tax roll to the county treasurer by January 15th per RCW 84.52.080.

10 SSB 5798 (iii) The county assessor has delivered the tax roll to the county treasurer by January 15th per RCW 84.52.080.

(d) Each tax statement must identify each part of the state property tax as the"state school levy–part I" and "state school levy."levy– part II." Tax payment due dates.

(4)(a) When the total amount of tax or special assessments on any lot, block or tract of real property, personal property, or on any mobile home payable by one person is $50 or more, and if one-half of such tax is paid after the 30th day of April but before the 31st day of October, together with the applicable interest and penalty on the full amount of tax payable for that year, the remainder of such tax is due and payable on or before the following 31st day of October and is delinquent after that date.

119 SSBSB 5798 (b)(4)(a) PaymentsWhen generatedthe bytotal anamount automatedof checktax processingor servicespecial assessments on any lot, block or paymentstract sentof viareal Unitedproperty, Statespersonal mailproperty, withor noon discernableany postmarkmobile datehome andpayable receivedby withinone threeperson businessis days$50 or more, and if one-half of such tax is paid after the 30th day of April orbut before the 31st day of October, astogether requiredwith underthe (a)applicable interest and penalty on the full amount of thistax subsection,payable arefor notthat delinquent.year, the remainder of such tax is due and payable on or before the following 31st day of October and is delinquent after that date.

(b) Payments generated by an automated check processing service or payments sent via United States mail with no discernable postmark date and received within three business days of the 30th day of April or the 31st day of October, as required under (a) of this subsection, are not delinquent.

(B)p. An additional penalty of eight percent is assessed on the delinquent tax amount on December 1st of the year in which the tax is due.

10 SB 5798 (B) An additional penalty of eight percent is assessed on the delinquent tax amount on December 1st of the year in which the tax is due.

(c)(i) If a taxpayer is successfully participating in a payment agreement under subsection (15)(b) of this section or a partial payment program pursuant to subsection (15)(c) of this section, the county treasurer may not assess additional penalties on delinquent p.taxes that are included within the payment agreement.

12 SSB 5798 taxes that are included within the payment agreement.

(8)(a)p. When real property taxes become delinquent and prior to the filing of the certificate of delinquency, the treasurer is authorized to assess and collect tax foreclosure avoidance costs.

11 SB 5798 (8)(a) When real property taxes become delinquent and prior to the filing of the certificate of delinquency, the treasurer is authorized to assess and collect tax foreclosure avoidance costs.

p.(9) Subsection (5) of this section notwithstanding, no interest or penalties may be assessed during any period of armed conflict regarding delinquent taxes imposed on the personal residences owned by active duty military personnel who are participating as part of one of the branches of the military involved in the conflict and assigned to a duty station outside the territorial boundaries of the United States.

13 SSB 5798 (9) Subsection (5) of this section notwithstanding, no interest or penalties may be assessed during any period of armed conflict regarding delinquent taxes imposed on the personal residences owned by active duty military personnel who are participating as part of one of the branches of the military involved in the conflict and assigned to a duty station outside the territorial boundaries of the United States.

Taxp. due dates and options for tax payment collections.

12 SB 5798 Tax due dates and options for tax payment collections.

p.Tax payments.

14 SSB 5798 Tax payments.

(c)(i) In addition to the payment agreement program in (b) of this subsection, the treasurer may accept partial payment of any currentp. and delinquent taxes including interest and penalties by any means authorized including electronic bill presentment and payments.

13 SB 5798 current and delinquent taxes including interest and penalties by any means authorized including electronic bill presentment and payments.

(d) Payments on past due taxes must include collection of the oldest delinquent year, which includes interest, penalties, and taxes within an ((eighteen))eighteen-month 18-month period, prior to filing a certificate of delinquency under chapter 84.64 RCW or distraint pursuant to RCW 84.56.070.

p.Due date for tax payments.

15 SSB 5798 Due date for tax payments.

(19)p. No earlier than 60 days prior to the date that is three years after the date of delinquency, the treasurer must waive all outstanding interest and penalties on delinquent taxes due from a taxpayer if the property is subject to an action for foreclosure under chapter 84.64 RCW and the following requirements are met:

14 SB 5798 (19) No earlier than 60 days prior to the date that is three years after the date of delinquency, the treasurer must waive all outstanding interest and penalties on delinquent taxes due from a taxpayer if the property is subject to an action for foreclosure under chapter 84.64 RCW and the following requirements are met:

p.(20) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

16 SSB 5798 (20) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

PART III CONSOLIDATING THE STATE PROPERTY TAX Sec.

301.

RCW 84.52.065 and 2022 c 56 s 13 are each amended to read as follows:

(1) Except as otherwise provided in this section, subject to the limitations in RCW 84.55.010, in each year the state must levy for collection in the following year for the support of common schools of the state a tax of ((three dollars and sixty cents)) $3.60 per ((thousand dollars)) $1,000 of assessed value upon the assessed valuation of all taxable property within the state adjusted to the state equalized value in accordance with the indicated ratio fixed by the state department ((of revenue)).

(2)(a) ((In addition to the tax authorized under subsection (1) of this section, the state must levy an additional property tax for the support of common schools of the state.

(i) For taxes levied for collection in calendar years 2018 through 2021, the rate of tax is the rate necessary to bring the aggregate rate for state property tax levies levied under this subsection and subsection (1) of this section to a combined rate of two dollars and forty cents per thousand dollars of assessed value in calendar year 2019 and two dollars and seventy cents per thousand dollars of assessed value in calendar years 2018, 2020, and 2021.

The p.

17 SSB 5798 state property tax levy rates provided in this subsection (2)(a)(i) are based upon the assessed valuation of all taxable property within the state adjusted to the state equalized value in accordance with the indicated ratio fixed by the state department of revenue.

(ii) For taxes levied for collection in calendar year 2022 and thereafter, the tax authorized under this subsection (2) is subject to the limitations of chapter 84.55 RCW.

(b)(i) Except as otherwise provided in this subsection, all taxes collected under this subsection (2) must be deposited into the state general fund.

(ii) For fiscal year 2019, taxes collected under this subsection (2) must be deposited into the education legacy trust account for the support of common schools.

(3) For taxes levied for collection in calendar years 2019 through 2021, the state property taxes levied under subsections (1) and (2) of this section are not subject to the limitations in chapter 84.55 RCW.

(4)(a) For taxes levied for collection in calendar year 2022 and thereafter, the aggregate rate limit for state property taxes levied under subsections (1) and (2) of this section is three dollars and sixty cents per thousand dollars of assessed value upon the assessed valuation of all taxable property within the state adjusted to the state equalized value in accordance with the indicated ratio fixed by the state department of revenue.

(b) If the aggregate rate of state property taxes levied under subsections (1) and (2) of this section for collection in any calendar year after 2021 exceeds $3.60 per $1,000 of assessed value, each rate must be reduced on a pro rata basis until the aggregate rate no longer exceeds $3.60 per $1,000 of assessed value.

(5) For property taxes levied for collection in calendar years 2019 through 2021, the rate of tax levied under subsection (1) of this section is the actual rate that was levied for collection in calendar year 2018 under subsection (1) of this section.

(6))) For taxes levied for collection in calendar year 2026, the state property tax levy rate is $2.095 per $1,000 of assessed value.

The state property tax levy rate provided in this subsection (2)(a) is based upon the assessed valuation of all taxable property within the state adjusted to the state equalized value in accordance with the indicated ratio fixed by the department.

p.

18 SSB 5798 (b) For taxes levied for collection in calendar year 2027 and thereafter, the limitations of chapter 84.55 RCW apply.

(3) As used in this section, "the support of common schools" includes the payment of the principal and interest on bonds issued for capital construction projects for the common schools.

Sec.

302.

RCW 84.36.630 and 2017 3rd sp.s.

c 13 s 312 are each amended to read as follows:

(1) All machinery and equipment owned by a farmer that is personal property is exempt from property taxes levied for any state purpose((, including the additional state property tax imposed under RCW 84.52.065(2),)) if it is used exclusively in growing and producing agricultural products during the calendar year for which the claim for exemption is made.

(2) (("Farmer")) For purposes of this section, "farmer" and "agricultural product" have the same meaning as defined in RCW 82.04.213.

(3) A claim for exemption under this section must be filed with the county assessor together with the statement required under RCW 84.40.190, for exemption from taxes payable the following year.

The claim must be made solely upon forms as prescribed and furnished by the department ((of revenue)).

ExceptThis for sections 101(5)(b), 102, and 103 of this act, this act applies to taxes levied for collection in 2026 and thereafter.

Sections 101(5)(b), 102, and 103 of this act apply to taxes levied for collection in 2027 and thereafter.

NEW SECTION.

Sec.

403.

RCW 82.32.805 and 82.32.808 do not apply to this act.

NEW SECTION.

Sec.

404.

1915 SSBSB 5798