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SHB L4O6 - Local state-shared tax for
affordable and supportive housing
What the bill does
Substitute House Bill 1406 [1] allows localjurisdictions (cities and counties)to impose a
local state-shared sales and use tax to fund affordable or supportive housing. The
consumer does not paythis tax, and the effective sales tax rate remains the same. Instead,
this tax is credited against the 6.570 state sales tax.
Depending on the population of the localjurisdiction, funds from this tax must be used for
the following:
. acquisition, rehabilitation or construction of affordable housing
. funding the operations and maintenance costs of new units of affordable
or supportive housing, or
. provide rental assistance to tenants
How to impose the tax
To impose the tax, the local jurisdiction must adopt both of the following:
. a resolution of intentto adopt legislation byJan.28,2020
. legislation to authorize the tax byJuly 28,2020
Local jurisdictions may impose this tax as early as Sept. 1,2019. The tax expires twenty
years from the date it was imposed. Local state-shared taxes may take effect no sooner
than thirty days after the Department of Revenue (department) receives notice of the
change and only on the first day of the month (RCW 82.14.055 (2) [2]).
Terms and abbreviations
Participating City (PCi) means the city that imposes the tax.
Participating County (PCo) means the county that imposes the tax.
Qualifying Local Tax (QLT) include the following taxes:
. The affordable housing levy authorized under RCW 84.52.105 [3].. The sales and use tax for housing and related services authorized under RCW
82.14.530 [4], provided the city has imposed the tax at a minimum or at least half of
the authorized rate.
. The sales and use tax for chemical dependency and mental health treatment services
or therapeutic courts authorized under RCW 82.14.460 [5] imposed by a city.
. The levy authorized under RCW 84.55.050 [6], if used solelyfor affordable housing.
Important dates
Date Requirements
Jan.28,2020 Jurisdictions must adopt resolution of intent to adopt
legislation to impose the new tax.
July 28, 2020 Jurisdictions must adopt legislation to authorize the
new tax.
Cities must instate Qualifying Local Tax
75 days after the
department receives
notice of the change
Local sales and use tax changes (QLTS, not the state
shared tax) may take effect. Changes can only begin on
the first day ofJanuary, April orJuly.
Tax distributions and rates
Jurisdictions will receive the tax distribution monthly when other local taxes are
distributed.
The maximum tax distribution a localjurisdiction is eligible to receive equals the reported
taxable retail sales within the jurisdiction in fiscal year 2019, multiplied by the authorized
tax rate. The maximum tax rate a jurisdiction may impose may not exceed either 0.01460/o
or 0.00730/0, depending on certain factors.
See tax rate tables below.
Maximum tax rates for Participating Cities (PCi) -July 28,2019 -July 28,2020
If the Participating City is...Then the tax rate
is...
not currently levying a Qualifying Local Tax O.0O73o/o
currently levying a Qualifying Local Tax
or
within a county that declares they will not be a participating
county
0.01460/o
Maximum tax rates for Participating Cities (PCi) - On or afterJuly 29,2020
If the Participating City is...Then the tax rate is...
not levying a Qualifying Local Tax 0.00730/0.
currently levying a Qualifying Local Tax 0.01460/o
Maximum tax rates for Participating Counties (PCo) -July 28,2019 -July 28,2020
If the Participating County is...Then the tax rate is...
within the limits of non-Participating Cities
and
within the limits of Participating Cities that do not levy a
Qualifying Local Tax
0.0073o/o
within unincorporated areas
and
any city that declares it will not be a participating city
0.01460/o
Maximum tax rates for Participating Counties (PCo) - On or afterJuly 29,2020
If the Participating County is...Then the tax rate is...
within the limits of Participating Cities that are not levying a
Qualifying Local Tax
0.00730/o
with in un incorporated areas
and
within the limits of any non-Participating City
0.01460/o
More information
Information for local governments [7]
Affordable housing Q&A [8]
Source URL: https://dor.wa.gov/find-law-or-rule/shb-1406-local-state-shared-tax-
afforda ble-a n d-su ppo rtive-housi ng
Links
[1]http://lawfilesext.leg.wa,gov/biennium12019-20/Pdf/Bills/Session%20Laws/House/1406-
S.SL.pdf
[2] https ://a p p. I eg.w a.gov / r cw ld efa u lt. a s px?c ite =82. 1 4. 0 5 5
[3] http://a p p. I eg.wa.gov/RCWd efa u lt. as px?cite=84.52. 1 05
[4] htlp: / / ap p. I e g.wa . gov/ RCWd efa u lt. a s px?c ite = 8 2. 1 4. 5 3 0
[5] http://a p p. I eg.wa. gov/ RCW/d efa u lt. a s px?cite=82 .1 4.460
[6] http://a p p. I eg.wa.gov/RCWd efa u lt. a s px?cite=84. 55.050
[7] https://dor.wa.gov/about/statistics-reports/information-local-governments
[8] https://dor.wa.gov/find-law-or-rule/shb-1406-local-state-shared-tax-affordable-and-
s u p po rtive- ho us i n g/affo rd a b I e-h o u s i ng-qa
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