All Roll Calls
Yes: 141 • No: 2
WashingtonHB 24512025-2026 Regular SessionHouseWALLET
Concerning local tax increment financing.
Sponsored By: Davina Duerr (Democratic)
Became Law
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Bill Overview
Analyzed Economic Effects
6 provisions identified: 1 benefits, 3 costs, 2 mixed.
One city gets 2026 tax increment expansion
During fiscal year 2026, a qualifying city may create tax‑increment areas with a combined value up to $500 million. The city must have 150,000–170,000 people, be in a county with over 1,500,000 people, and the area must connect to I‑405 and fund transportation improvements that improve neighborhood integration. The ordinance must pass by June 30, 2026. Each taxing district in the area must approve participation by majority vote, and any district that does not approve is excluded from apportionment.
Stronger notice and mitigation for tax increment
Beginning June 2, 2026, sponsors must give each affected taxing district 180 days’ written notice before sending a project analysis to the State Treasurer and offer to meet within 30 days. The analysis must state goals, parcels, duration, expected private development with and without the improvements, and a prioritized list of public improvements with costs, dates, funding, and bonds expected in the first seven years. If a district flags statutory triggers within 30 days (for example, 50+ new homes, a 10% assessed‑value impact, forecast service demand or revenue loss, or more than 20% of its value in increment areas), the parties must negotiate, then try mediation, and, if needed, go to binding arbitration. Public hospital and fire districts get the same path when at least 20% of their value is affected or their plans show service increases tied to the area. Sponsors must publish a yearly report with construction progress, economic benefits, mitigation status, and effects on tax revenues and rates, and include statements from impacted districts.
Limits on 20-year housing tax breaks
Beginning June 2, 2026, the 20‑year housing property‑tax exemptions tied to high‑capacity transit do not apply inside tax‑increment areas that existed before that date. No new exemptions under RCW 84.14.020 are allowed on or after January 1, 2032. No extensions under RCW 84.14.020(6) are allowed on or after January 1, 2046.
Tighter limits on tax increment areas
Beginning June 2, 2026, new tax‑increment areas face firm size and timing limits. Each area’s assessed value is capped at the lesser of $200 million (adjusted yearly by CPI starting June 1, 2027) or 20% of the sponsor’s total assessed value; two areas together share this same cap. A local government may run no more than two active areas at once, and areas cannot overlap. New areas take effect on June 1 after the ordinance is adopted, must start construction within five years (with up to two years’ extension), and must end by the earlier of 25 years after first revenue collection or when project debt is paid. Areas created before June 2, 2026 keep the older rules.
How property value growth is counted
Starting June 2, 2026, the law counts 100% of any post‑designation rise in a property’s assessed value as the increment, and the increment cannot be less than zero. When voters approve a higher regular levy, the tax‑allocation base for that district rises the next year by the levy‑rate increase times the district’s total assessed value, and stays at that level while the voter approval lasts. For areas designated as of May 9, 2023, assessors must add the value of private improvements on public land to the original base for the year the area was first set.
Developers can be charged setup fees
Beginning June 2, 2026, a local government may charge a developer who agrees to participate a fee to cover the project analysis and setup work. The fee can pay for staff time, consultants, and other administrative costs. It applies only when the developer agrees to take part.
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Sponsors & Cosponsors
Sponsor
Davina Duerr
Democratic • House
Cosponsors
April Berg
Democratic • House
Lisa Parshley
Democratic • House
Roll Call Votes
Senate vote • 3/5/2026
3rd Reading & Final Passage
Yes: 48 • No: 1
House vote • 2/13/2026
3rd Reading & Final Passage
Yes: 93 • No: 1 • Other: 4
Actions Timeline
Effective date 6/2/2026.
3/23/2026HouseChapter 141, 2026 Laws.
3/23/2026HouseGovernor signed.
3/23/2026legislatureDelivered to Governor.
3/10/2026legislaturePresident signed.
3/9/2026legislatureSpeaker signed.
3/6/2026legislatureThird reading, passed; yeas, 48; nays, 1; absent, 0; excused, 0.
3/5/2026HouseRules suspended. Placed on Third Reading.
3/5/2026HousePlaced on second reading by Rules Committee.
3/3/2026HouseMinority; without recommendation.
3/2/2026HouseWM - Majority; do pass.
3/2/2026HousePassed to Rules Committee for second reading.
3/2/2026HouseReferred to Ways & Means.
2/24/2026HouseAnd refer to Ways & Means.
2/23/2026HouseLGV - Majority; do pass.
2/23/2026HouseFirst reading, referred to Local Government.
2/17/2026HouseThird reading, passed; yeas, 93; nays, 1; absent, 0; excused, 4.
2/13/2026HouseRules suspended. Placed on Third Reading.
2/13/2026HouseFloor amendment(s) adopted.
2/13/2026House2nd substitute bill substituted.
2/13/2026HouseRules Committee relieved of further consideration. Placed on second reading.
2/12/2026HouseReferred to Rules 2 Review.
2/9/2026HouseFIN - Majority; 2nd substitute bill be substituted, do pass.
2/9/2026HouseMinority; without recommendation.
2/9/2026HouseFIN - Executive action taken by committee.
2/9/2026House
Bill Text
Session Law
3/25/2026
Bill as Passed Legislature
3/11/2026
Engrossed Second Substitute
2/14/2026
Second Substitute
2/10/2026
Substitute Bill
2/3/2026
Original Bill
1/13/2026
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