Washington Law Gives Local Governments New Revenue Options Under HB 2442

Washington Law Gives Local Governments New Revenue Options Under HB 2442

After the 2026 legislative session's passage of HB 2442, Washington cities and counties gained several new taxing and spending options. The law gives local governments greater flexibility in how they raise and use revenue for housing, public health, public safety, family services, and other community needs. Most provisions took effect on July 1, 2026, though some changes take effect on January 1, 2027.

One notable change is the introduction of a new sales tax for child and family services. Beginning January 1, 2027, cities and counties may impose a sales tax of up to 0.01 percent without voter approval. Revenue may fund childcare, before- and after-school programs, rental and shelter assistance, transportation, and other services that support children and families. If both a city and a county adopt the tax, the combined rate cannot exceed 0.01 percent.

HB 2442 also gives local governments greater flexibility in using existing revenue. Cities and counties may now use certain Real Estate Excise Tax (REET) funds to address nuisance properties. Revenue from the existing housing and related services sales tax may also be used to rehabilitate affordable housing and to provide rental assistance to certain low-income populations, including veterans, seniors, people with disabilities, and people experiencing or at risk of homelessness.

Counties also received broader options for other revenue sources. County rental car sales tax revenue, previously limited largely to sports-related purposes, may now fund criminal justice programs. These programs can include public defenders, diversion programs, reentry services, behavioral health programs, efforts to reduce homelessness, and crisis response. Flood control zone districts may also provide financial assistance to households and businesses damaged by flooding when the governor declares an emergency.

The law also creates a new option for counties to levy a public health clinic property tax of up to five cents per $1,000 of assessed value. Counties must use the revenue for public health clinics and related services. HB 2442 also allows county veterans' assistance and mental health and developmental disability levies to be collected separately from the county's regular property tax levy and to be excluded from the state's $5.90 aggregate levy rate limit.

For businesses and taxpayers, the key point is that HB 2442 does not automatically impose all of these taxes. Instead, it gives local elected officials additional options to raise revenue or redirect existing funds. As cities and counties consider using these new authorities, businesses may want to closely monitor local budget discussions, particularly decisions on sales and property taxes, housing, public health, and criminal justice spending.

HB 2442 significantly expands financial flexibility for local governments in Washington. Supporters may view these tools as a way to address growing service needs and budget pressures, while businesses and taxpayers may focus on how the new authority affects overall tax burdens and local spending priorities. The impact will ultimately depend on which options individual cities and counties adopt.

Read the original MRSC article: Local Governments See Updates to Sales Taxes and Other Revenues After 2026 Legislative Session.