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Intended audience: County treasurers, taxpayers.
The 2025 Legislature passed Engrossed Senate Bill 5529 (ESB 5529) which modifies the county population threshold for counties and cities that may exempt from taxation the value of accessory dwelling units (ADU) to incentivize rental to low-income households. The bill is effective July 25, 2025.
Current law
A county legislative authority for counties with a population of 1,500,000 or more may exempt from taxation the value of an ADU if the following conditions are met (RCW 84.36.400):
- The improvement represents 30 percent or less of the value of the original structure.
- The taxpayer demonstrates that the unit is maintained as a rental property for low-income households.
- The taxpayer files notice of their intention to participate in the exemption program.
- Rent charged does not exceed more than 30 percent of the tenant’s monthly income.
- The ADU is not occupied by a person under the age of 60 who is an immediate family member of the taxpayer.
What the bill does
This bill amends RCW 84.36.400 as follows:
- Authorizes a city or county legislative authority, in a county with a population of at least 900,000 but not more than 1,500,000, to exempt from taxation the value of an ADU.
- Requires the taxpayer to demonstrate that the ADU is maintained as a rental property for low-income households by submitting an affidavit stating the tenant’s income along with an income verification document.
- If the city or county legislative authority, in a county with a population of at least 900,000 but not more than 1,500,000, passes a resolution authorizing the exemption within their geographic boundaries, the resolution must outline a process for the legislative authority to provide the county assessor with information to verify the low-income household and taxpayer are in compliance with program requirements.
- Requires an annual exemption application
- In a county with a population greater than 1,500,000, the legislative authority may allow the exemption for ADUs that are attached to or within a single-family dwelling or are detached units on the same real property or both.
- In a county with a population of at least 900,000 but not more than 1,500,000, the legislative authority may allow the exemption for ADUs that are detached units on the same property.
- The assessor may collect a fee from the taxpayer to cover the cost of administration.
- The assessor may determine what property tax and penalties will be due, if any, in the case that the legislative authority finds noncompliance by a taxpayer.
- Legislative authorities that opt to exempt ADUs shall establish policies to assist tenants upon expiration of an exemption, such as providing information on services available at the time of expiration.
Who can apply for the exemption?
Homeowners with ADUs in the following jurisdictions:
- Counties with a population of 1,500,000 or more, if authorized by the county legislative authority:
- King County - 2,340,211
- Counties with a population of at least 900,000 but not more than 1,500,000, if authorized by the county legislative authority:
- Pierce County – 941,170
- Any city in Pierce County, if authorized by the city legislative authority.
How do I apply for the exemption?
The county assessor administers this exemption. Find your county assessor.
Question & Answer (Q&A)
Q. I live in a qualifying county or city and have been renting my ADU to a low-income tenant for years. Can I receive an exemption for previous years?
A. No. ESB 5529 is not retroactive and applies to taxes levied for collection in 2026 and thereafter, if authorized by an applicable legislative authority.
Questions?
Please visit our property tax page, call 360-534-1400, or contact you county assessor for more details.
