Senate Bill 5398 creates a new partial property tax exemption program for veterans with service-connected disabilities and their surviving spouses or domestic partners and also amends multiple existing property tax statutes. The bill adds a new section to chapter 84.36 RCW (section 102) establishing exemption amounts tied to U.S. Department of Veterans Affairs disability ratings (10–29% rated: up to $5,000; 30–49%: up to $7,500; 50–69%: up to $10,000; 70–100%: up to $12,000) and provides that veterans rated 100% disabled or awarded 100% compensation due to individual unemployability may be exempt from taxation of the total appraised value of their residence homestead. It also amends RCW 84.36.381 and related sections to adjust eligibility, valuation, ownership, and documentation rules, and to permit immediate prorated exemptions for veterans who qualify after January 1 of a tax year. The bill changes procedures and administrative rules: the Department of Revenue must begin annual inflation adjustments of specified exemption amounts on January 1, 2026 using a Seattle CPI measure (rounded to the nearest $5); county assessors may require income documentation and must notify recipients about renewal requirements every six years; the department must authorize electronic filing and publish updated income thresholds periodically with county-specific adjustments; and denials, appeals, and collection of erroneously granted exemptions are governed by existing appeal and penalty provisions. The act also amends statutes governing municipal benefit charges for fire protection to authorize such charges in certain annexation circumstances, sets public notice, hearing, election, and review procedures, and provides partial exemptions from those benefit charges for persons qualifying under RCW 84.36.381–84.36.389 or the new section 102 (25%, 50%, or 75% depending on income criteria or section 102 eligibility). Several other changes are included, such as credits for qualifying lessees, modifications to filing and renewal timing, and notification and valuation duties for assessors. The bill amends numerous RCWs (including but not limited to RCW 84.36.381, 84.36.379, 84.36.385, 84.36.387, 84.39.010, 52.26.270, 35.13.256, 82.29A.120) and affects agencies including the Department of Revenue, county assessors and treasurers, the Washington State Department of Veterans Affairs (by reference to VA ratings), and cities/towns proposing benefit charges. The provided text is incomplete in places: section 102 ends mid-sentence and several specific amounts and cross-referenced subsections (including the complete text of subsection (4) subject to inflation adjustment and some amended RCW provisions) are not included here, so the summary does not cover any provisions that may appear in the missing portions.

If enacted, the bill would give many veterans with service‑connected disabilities and some surviving spouses/domestic partners immediate, measurable property tax relief: fixed partial exemptions tied to VA disability ratings (small amounts up to $12,000 for low to high ratings and a full residence exemption for veterans rated or awarded 100% disability or individual unemployability), prorated for those who qualify after January 1 of a tax year. It also extends similar percentage exemptions (25%, 50%, or 75%) from new local fire protection benefit charges for people who qualify under the veteran/elderly income exemptions, requires the Department of Revenue to index certain exemption amounts for inflation each year starting in 2026, and creates filing, renewal, income‑verification, and notification duties (including electronic filing) for assessors and the Department of Revenue. The groups most affected are veterans with service‑connected disabilities and eligible surviving spouses/partners, who would likely pay noticeably less in property taxes and some local benefit charges; lessees and sublessees who qualify would see tax reductions roughly equal to the exemption percentage; and local governments, county assessors, and treasurers would face new administrative work and potential revenue reductions where exemptions or credits apply (cities proposing benefit charges must follow new hearing, ballot, and collection procedures and allow the partial exemptions). Important implementation details and the exact fiscal impact are unclear from the provided text because portions of the new section and the specific dollar amounts referenced for inflation adjustment are missing.