Bill
HB 2442
The bill expands local housing funding by adjusting document recording surcharges, REET credits, and levy rules, while requiring voter approval for new taxes.
HB 2442 Summary (Washington, 2025-2026 Session)
Purpose and overall impact
- The bill seeks to provide local governments with greater tax resources and more flexibility in funding capital projects and housing, while adjusting the use and distribution of several existing revenue streams.
- It makes targeted revisions to document recording fees, housing-related funding, and several levies and tax authorities, with the aim of expanding affordable housing programs, homelessness services, and related operations and maintenance.
Key provisions and changes
1) Document recording surcharge and affordable housing funding (sections amended and adopted/withdrawn language)
- Adjusts the document recording surcharge (RCW 36.22.250 and 2025 c 408 s 3):
- Surcharge amount changes: originally a surcharge of $183 per instrument; bill proposes $159 per instrument (with subsequent amendments proposed to adjust amounts in various versions).
- Allocation of funds:
- 1% retained by the county auditor for fee collection.
- A portion retained by the county for administration and local distribution.
- A larger portion transmitted to the state treasurer for the Home Security Fund (to be used by the Department of Commerce for eligible purposes).
- A portion transmitted to the state treasurer for the Affordable Housing for All account and the Landlord Mitigation Program account.
- Main effect: removes the requirement that a portion of the document recording fee be deposited into the Affordable Housing for All account and otherwise rebalances the distribution across accounts.
2) Affordable housing and homelessness funding framework
- Allows the portion of the surcharge allocated to counties to be used for:
- Up to 10% for county administration and local distribution, with at least 75% retained for purposes of the county’s local homeless housing plan (or combined with city distributions if a city operates its own local homeless housing program).
- At least 15% retained for eligible housing activities serving extremely low- and very low-income households (with emphasis on households at or below 30% of AMI). Eligible activities include acquisition, construction/rehabilitation, operating costs, rental assistance, and emergency shelters.
- The remainder supports housing initiatives, including operating costs, and other eligible activities, per interlocal agreements and local housing needs.
- Department of Commerce role:
- Administers funds from the Home Security Fund and the Affordable Housing for All account with specific grant programs for homelessness assistance and related services.
- Counties have first right of refusal to receive funds, with fallback to suitable alternates if county does not respond.
- Local scope of use:
- Funds may be used for housing projects, operating costs, and rental assistance, prioritizing extremely low-income households and households facing chronic homelessness.
3) Real Estate Excise Tax (REET) adjustments and credits
- Adds/removes credits and administrative provisions related to REET:
- Credits against state REET for first-time homebuyers purchasing residential property, where the sale is part of an affordable housing initiative.
- Department of Revenue to adopt rules implementing the credit.
4) Levy reforms and voter approval requirements
- Adds voter approval requirements for certain sales/use taxes and public health clinic property tax measures:
- Any city or county proposing a tax authorized in this package must have voter approval via a proposition at a general or special election.
- Strengthens the process by requiring a majority vote before imposing certain taxes.
5) Veterans’ and mental health/developmental disabilities levies
- Removes provisions that would have allowed levies to be placed outside the standard 5.90 local tax rate cap or to be levied separately from the regular property tax.
- Reconciles levy authority with existing caps and requires use of portions of regular property tax levy for indigent defense if those levies are removed from the regular levy.
6) Other tax and levy-related adjustments
- Changes to sales tax options for services for children and families and county public health clinic property tax—replacing or removing certain authorizations.
- Reinstates certain levy lid lift rules, allowing single-year or multi-year increases up to six years, with restrictions preserved.
Effective date and status
- Governor signed on March 25, 2026; Chapter 221, 2026 Laws.
- Effective July 1, 2026, with various administrative updates and transitional provisions depending on enacted sections.
Sponsors and opposition
- Sponsors include a broad group of representatives (list in bill text).
- Notable opponents listed include groups concerned about tax fairness and industry associations.
What would be affected
- Counties and cities implementing or relying on document recording surcharges, REET, and affordable housing-related funding.
- Department of Commerce administering homelessness and affordable housing grants.
- Homeowners and homebuyers through REET credits and housing-related tax credits.
- Local governments seeking to raise funds for housing, homelessness services, and related infrastructure.
- Voter-approval processes for new or increased local taxes.
Compiled from official sources — confirm details with the bill’s official record.
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