This bill amends the definitions in RCW 84.36.383, which are used for the property tax exemption programs in RCW 84.36.381–84.36.389. It creates a new income exclusion when calculating "combined disposable income" for those exemptions by allowing rental amounts up to $6,000 per year received from renting living space in the person's principal place of residence to be subtracted (excluded). Amounts from short-term rentals (as defined in RCW 64.37.010) are not eligible for this exclusion and must be reported as income. The bill cites the definition of "rental amount" in RCW 59.18.030 and declares the change applies to taxes levied for collection in 2027 and thereafter. It also states that RCW 82.32.805 and 82.32.808 do not apply to the act and that the legislature intends the preference and its expansion to be permanent. The amendment also expands and clarifies many defined terms used in calculating combined disposable income and eligibility, including definitions for accessory dwelling unit, cotenant, principal place of residence, real property, residence, county median household income, the department (Department of Revenue), disability, disposable income, and the tiered income thresholds. The text lists specific items that continue to be deductible or excluded from combined disposable income (for example, certain prescription drugs, Medicare premiums and related costs, durable medical equipment, long-term care insurance, and specified medical devices), and adds the rental exclusion to that list. Important context is missing from these excerpts: the chunk does not include the substantive eligibility criteria, application procedures, administrative processes, or benefit calculation rules of the exemption programs in RCW 84.36.381–84.36.389, nor does it reproduce the full prior text of RCW 84.36.383 or the exact texts of the external definitions it cites (RCW 59.18.030 and RCW 64.37.010). Those details are necessary to fully understand how the new rental exclusion integrates with existing program rules.

If enacted, people who live in a home and rent out part of that principal residence (for example a room or an accessory dwelling unit) could subtract up to $6,000 a year in rental income when their household income is tested for the property tax exemptions in RCW 84.36.381–84.36.389, making it more likely they will qualify for or retain those exemptions and therefore lower their property tax burden. Income from short-term rentals is explicitly not eligible for that exclusion and must be reported as normal income; the change applies to taxes collected beginning in 2027 and will be administered by the Department of Revenue, with spouses, domestic partners, and cotenants counted in combined income calculations. The groups most affected are modest-income homeowners who rent long-term living space in their own homes, who could see reduced taxes or better access to exemptions, and local taxing jurisdictions, which could face some reduction in property tax revenue; short-term rental operators see no benefit. The statute ties terms like “rental amount” and “short-term rental” to other laws and does not include the full exemption eligibility rules or any fiscal estimates here, so the exact number of people helped and the budget impact are not shown in this text.