HB 1165
In CommitteeHouse
Property tax exemptions
Expanding access to the property tax exemption program for seniors, people retired due to disability, and veterans with disabilities.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill raises income limits and expands eligibility for Washington’s property tax exemption program for seniors, people retired due to disability, and veterans with disabilities. Starting in 2027, income thresholds will be higher and automatically adjusted every three years based on local median household income, and more medical and disability-related expenses can be subtracted when calculating income for eligibility.
- Expands the property tax exemption program by raising income thresholds for eligibility—starting in 2027, thresholds will be higher and tied to local median household income (e.g., 55% of county median in 2027, rising to 65% in 2027 and beyond for the highest tier).
- Increases the number of income tiers (thresholds 1, 2, and 3) and adjusts them every three years beginning August 1, 2023, to keep pace with local income changes.
- Adds new definitions to clarify how income is calculated, including 'combined disposable income' (income of the applicant, spouse/domestic partner, and co-tenants) and 'disposable income' (federal adjusted gross income plus certain additions like pensions, Social Security, and veterans benefits—though some veterans benefits are excluded).
- Allows deductions from income for specific medical and disability-related expenses, such as prescription drugs, long-term care insurance, durable medical equipment, and health insurance premiums (including Medicare).
- Expands the definition of 'residence' to include accessory dwelling units (like backyard cottages), cooperative housing shares, and homes on tribal or federal land, making more types of housing eligible.
Who is affected
- Seniors, people retired due to disability, and veterans with disabilities — Seniors, people retired due to disability, and veterans with disabilities who own and live in their homes may qualify for larger property tax exemptions starting in 2027, based on higher income limits tied to local median incomes.
- Spouses, domestic partners, and co-tenants — Spouses, domestic partners, and co-tenants (people with ownership interest in the home) will be included in income calculations when determining eligibility for property tax exemptions.
- County assessors and local governments — Local governments and county assessors will need to verify income, disability status, and residency for exemption applications and may face increased administrative demands.
- People with high medical or disability-related expenses — People with high medical or disability-related expenses may benefit from having those costs subtracted from income when calculating eligibility, potentially expanding access to relief.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Raising income thresholds—starting at 55% of county median in 2027 and rising to 65% and 75% for thresholds 2 and 3—will allow many more seniors and disabled residents to qualify for property tax relief, especially in counties where median incomes have risen but fixed thresholds previously excluded them.
FinancialPeopleRef: Sec. 1(8)(d), (9)(d), (10)(d)Allowing deductions for prescription drugs, long-term care insurance, Medicare premiums, and other medical/disability-related expenses significantly improves affordability for seniors and disabled residents with high out-of-pocket health costs—many of whom live on fixed incomes and are at risk of housing instability.
HealthcarePeopleRef: Sec. 1(2), (7)(f), (2)(a)-(m)Expanding the definition of “residence” to include accessory dwelling units, cooperative housing shares, and homes on tribal/federal land ensures equitable access to the exemption for historically underserved groups—including tribal members, low-income co-op residents, and those in ADUs—who were previously excluded.
HousingPeopleRef: Sec. 1(13)Triennial indexing to local median household income helps prevent erosion of exemption eligibility over time due to rising local incomes, preserving real access to relief and reducing the need for frequent legislative updates.
HousingPeopleRef: Sec. 1(8)(d), (9)(d), (10)(d)By reducing housing cost burdens for vulnerable populations, the bill may help reduce emergency shelter use, hospitalizations linked to housing insecurity, and interactions with law enforcement—though this is an indirect and hard-to-quantify effect.
Public SafetyLean peopleRef: Sec. 1(7)(f), (2)(a)-(m)
Potential Concerns (5)
The expansion of income-based exemptions—especially with higher thresholds tied to local median household income—will reduce property tax revenue for local governments, potentially leading to cuts in public services like schools, roads, and emergency response, which disproportionately harm lower-income households that rely most on those services.
FinancialPeopleRef: Sec. 1(2), (7), (8)(d), (9)(d), (10)(d)Including spouses, domestic partners, and co-tenants in combined income calculations may disqualify some households that would otherwise qualify—particularly in multi-generational or shared-housing arrangements—reducing access to relief for modest-income households living with family or roommates.
HousingPeopleRef: Sec. 1(3), (2)While medical expense deductions expand access, the requirement to itemize and document expenses may disproportionately burden low-income seniors with limited access to tax professionals or digital recordkeeping, limiting actual benefit uptake despite the policy intent.
FinancialLean peopleRef: Sec. 1(7)(f), (2)(a)-(m)Expanding the definition of “residence” to include accessory dwelling units and cooperative housing increases administrative complexity for county assessors, who must verify ownership, occupancy, and income across more housing types—potentially straining local resources without additional funding.
Local GovernmentLean peopleRef: Sec. 1(13), New Sec. 2Automatic triennial adjustments to income thresholds based on county median household income may lag behind inflation or rapid local price changes, especially in high-cost urban counties, reducing real value of the exemption over time for qualifying households.
FinancialRef: Sec. 1(8)(d), (9)(d), (10)(d)
Who Is Most Affected
Seniors and disabled residents with incomes near or above current thresholds (e.g., $30K–$45K combined) will gain meaningful property tax relief—especially those with high medical costs. However, those in high-cost urban counties may still struggle if local property taxes rise faster than income thresholds.
Spouses, domestic partners, and co-tenants with higher incomes may cause a household to exceed the new (but still relatively high) thresholds—potentially excluding some modest-income households that previously qualified under solo-income rules.
Local governments face revenue loss and increased administrative burden verifying expanded eligibility criteria, especially in counties with high numbers of ADUs, cooperatives, or tribal lands—though the state does not provide funding to offset these costs.
People with high medical or disability-related expenses benefit from the income deductions, but only if they can document and substantiate those costs—potentially excluding those without access to medical care or recordkeeping infrastructure.
Tribal members and residents of cooperative housing gain formal eligibility for the first time, but implementation challenges (e.g., verifying ownership on trust land, coordinating with tribal governments) may delay or limit actual benefit receipt.