Adaptive housing tax pref.

AN ACT Relating to modifying and extending the adaptive housing 1
retail sales and use tax preference for disabled veterans; amending 2
RCW 82.08.0207 and 82.12.0207; amending 2017 c 176 s 1 (uncodified); 3
and providing expiration dates. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
Sec. 1. RCW 82.08.0207 and 2017 c 176 s 2 are each amended to 6
read as follows: 7
(1) ((An)) Until January 1, 2038, an eligible purchaser who has 8
paid the tax levied by RCW 82.08.020 on materials incorporated into, 9
and labor and services rendered in respect to, adapted housing is 10
eligible for an exemption from all or a portion of those taxes in the 11
form of a remittance. The total amount of a remittance that an 12
eligible purchaser may receive under this section and ((/or)) RCW 13
82.12.0207 is limited to ((two thousand five hundred dollars )) $5,000 14
for each adapted housing project. The remittance under this section 15
is for the state portion of the sales tax only. 16
(2)(a) An eligible purchaser claiming an exemption from tax in 17
the form of a remittance under this section must pay the tax imposed 18
by RCW 82.08.020 on such purchases eligible for the remittance. The 19
eligible purchaser may then apply to the department for remittance of 20
all or part of the tax paid under RCW 82.08.020 on such purchases, 21
H-2480.1
HOUSE BILL 2135
State of Washington 69th Legislature 2026 Regular Session
By Representatives Barnard, Leavitt, Dufault, Schmidt, Abbarno, Low,
Simmons, Richards, Rule, Paul, Shavers, Graham, Valdez, and Couture
Prefiled 12/11/25. Read first time 01/12/26. Referred to Committee
on Finance.
p. 1 HB 2135
subject to the limits in subsections (1) and (3) of this section. As 1
part of the application, the eligible purchaser must provide proof of 2
eligibility for the remittance in the form of a copy of the grant 3
award letter from the United States department of veterans affairs, 4
construction contracts for adapted housing, and invoices for 5
purchases qualifying for a remittance under this section.6
(b) An eligible purchaser may not apply for more than one 7
remittance under this section per calendar quarter.8
(c) The department must on a quarterly basis remit exempted 9
amounts to eligible purchasers whose applications were approved by 10
the department during the previous quarter. 11
(3)(a) The remittance under this section is only available on a 12
first-in-time basis. The department must keep a running total of all 13
approved remittances under this section and ((/or)) RCW 82.12.0207 14
during each fiscal year. The department may not allow any remittance 15
that would cause the total amount of remittances allowed under this 16
section and((/or)) RCW 82.12.0207 to exceed ((one hundred twenty-five 17
thousand dollars )) $250,000 in any fiscal year, unless additional 18
amounts are appropriated for this specific purpose.19
(b) Beginning in fiscal year 2028, the individual remittance 20
amount in subsection (1) of this section and the statewide total 21
remittance amount in (a) of this subsection (3) must be adjusted 22
annually based on the United States bureau of labor statistics' 23
consumer price index for the Seattle area, as published by the bureau 24
of labor statistics of the United States department of labor.25
(c) The department must provide notification on its website 26
monthly of the amount remaining before the statewide annual limit in 27
this subsection is reached. 28
(4) The definitions in this subsection apply throughout this 29
section unless the context clearly requires otherwise.30
(a) "Adapted housing" means a construction project that has been 31
approved by the United States department of veterans affairs as part 32
of the specially adapted housing grant program or the special housing 33
adaptation grant program to modify or construct a home so that it can 34
accommodate the needs of a disabled or severely disabled veteran.35
(b) "Eligible purchaser" means a disabled or severely disabled 36
veteran who has received either a specially adapted housing grant or 37
a special housing adaptation grant from the United States department 38
of veterans affairs. 39
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(c) "Special housing adaptation" has the same meaning, 1
eligibility requirements, and restrictions as "special home 2
adaptation grant" in 38 C.F.R. 3.809a, as of July 1, 2016.3
(d) "Specially adapted housing" has the same meaning, eligibility 4
requirements, and restrictions as in 38 C.F.R. 3.809, as of July 1, 5
2016. 6
(5) This section expires January 1, 2039.7
Sec. 2. RCW 82.12.0207 and 2017 c 176 s 3 are each amended to 8
read as follows: 9
(1) ((An)) Until January 1, 2038, an eligible purchaser who has 10
paid the tax levied by RCW 82.12.020 on materials incorporated as an 11
ingredient or component of adapted housing is eligible for an 12
exemption from all or a portion of that tax in the form of a 13
remittance. 14
(2) All of the eligibility requirements, conditions, limitations, 15
and definitions in RCW 82.08.0207 apply to this section.16
(3) This section expires January 1, 2039.17
Sec. 3. 2017 c 176 s 1 (uncodified) is amended to read as 18
follows: 19
(1)(a) The legislature finds that it is important to recognize 20
the service of veterans and to acknowledge the continued sacrifice of 21
those veterans who have service-connected physical disabilities. The 22
legislature further finds that many disabled veterans often need 23
customized, accessible housing in order to be self-sufficient and to 24
maintain a high quality of life. The legislature further finds that 25
disabled veterans have higher poverty rates than disabled 26
nonveterans. The legislature further finds that the federal 27
government provides a grant to assist disabled veterans with the 28
costs of constructing, modifying, or adapting their homes, but that 29
thousands of these dollars end up covering the sales or use tax owed 30
on these construction projects. The legislature further finds that 31
this results in a shift of cost to the same population of disabled 32
veterans whose burden the federal grant program is intended to ease.33
(b) It is the legislature's intent to provide specific financial 34
relief for disabled veterans by providing a sales and use tax 35
exemption in the form of a remittance for the construction of adapted 36
housing for disabled veterans who have been awarded a federal grant 37
to modify their homes. 38
p. 3 HB 2135
(2)(a) This section is the tax preference performance statement 1
for the tax preferences contained in ((this act )) sections 2 and 3, 2
chapter 176, Laws of 2017 and sections 1 and 2, chapter . . ., Laws 3
of 2026 (sections 1 and 2 of this act) . This performance statement is 4
only intended to be used for subsequent evaluation of the tax 5
preferences. It is not intended to create a private right of action 6
by any party or be used to determine eligibility for preferential tax 7
treatment. 8
(b) The legislature categorizes the tax preference s in sections 2 9
((of this act )) and 3, chapter 176, Laws of 2017 and sections 1 and 10
2, chapter . . ., Laws of 2026 (sections 1 and 2 of this act) as ones 11
intended to provide tax relief for certain businesses or individuals, 12
as indicated in RCW 82.32.808(2)(e). 13
(c) To measure the effectiveness of ((this act )) sections 2 and 14
3, chapter 176, Laws of 2017 and sections 1 and 2, chapter . . ., 15
Laws of 2026 (sections 1 and 2 of this act) in achieving the specific 16
public policy objective described in subsection (1) of this section, 17
the joint legislative audit and review committee must, at minimum, 18
evaluate the following: 19
(i) The number of qualifying adapted housing projects, as 20
reported to the department of revenue through the remittance 21
application process on an annual basis; and 22
(ii) The total amount of adapted housing grants awarded to 23
veterans, as reported by the United States department of veterans 24
affairs. 25
(d) In addition to the data sources described under this section, 26
the joint legislative audit and review committee may use any other 27
data it deems necessary in performing the evaluation under this 28
subsection. 29
(e) The joint legislative audit and review committee must review 30
the tax preferences provided in ((this act )) sections 2 and 3, 31
chapter 176, Laws of 2017 and sections 1 and 2, chapter . . ., Laws 32
of 2026 (sections 1 and 2 of this act) as part of its normal review 33
process of tax preferences. 34
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