Short-term rental tax option draws fierce debate as committee reopens HB 25-59
Get AI-powered insights, summaries, and transcripts
Subscribe
Summary
Rep. Parsley’s HB 25-59 would let cities and counties add a 4% lodging tax on short-term rentals (effective 04/01/2027) with up to 15% for administration; supporters say proceeds would fund affordable housing while owners warn the tax unfairly targets small hosts and may harm local economies.
The House Finance Committee reopened the hearing on HB 25-59 on Jan. 20 and heard more than an hour of public testimony for and against a proposed local-option excise tax on lodging and short-term rentals.
Staff outlined the bill’s mechanics: the measure would allow a city or county to impose an additional 4% excise tax on lodging and short-term rentals beginning April 1, 2027. A county must allow a credit against its own tax for taxes imposed by cities within its boundaries; the short-term rental tax would be treated separately for statutory caps. Local governments could retain up to 15% of revenues for administrative costs and must publish annual reports on spending. In a prior fiscal estimate for a similar bill staff cited a DOR estimate of about $600,000 in implementation costs in year one and a combined $21,000,000 in local collections in the bill’s first year.
Proponents argued the tax is a targeted option that returns vacation- and visitor-generated revenue to communities facing housing loss tied to short-term rentals. Mayor Carl Floria of Leavenworth said second homes and whole-home short-term rentals have reduced local workforce housing and that local voters should be able to choose to fund replacements. Caitlin Sullivan, a Port Angeles host, told the committee the tax would be paid by vacationers and allow tourism towns to build homes for their workers.
Opponents—many individual short-term rental owners and host-association representatives—called the bill discriminatory because it singled out STRs rather than taxing all lodging uniformly. Lisonbee Moser of the Washington Hosts Collaborative Alliance said many hosts rely on modest supplemental income and urged the committee not to pass the bill. Several hosts described low-margin, owner-operated listings used to afford retirement or to pay mortgages and warned that higher taxes could force them to stop hosting and reduce local spending.
Industry groups and some members raised fairness questions and implementation details: which lodging types would be taxed, whether hotels would face the same rate, how renters or owner-occupied exemptions would be defined, and whether the tax could be shown to improve housing affordability in large metropolitan areas where impacts are uneven. Members asked staff for a written definition of “short-term rental” and for clarification about which taxes count toward existing caps.
The committee did not vote. The bill’s prime sponsor said HB 25-59 is a local option and noted stakeholder negotiations in the Senate last session; supporters and opponents asked the committee to refine definitions and exemptions before the measure moves forward.
Next steps: staff will follow up with definitions and lists of taxes excluded from statutory caps; the committee may consider amendments addressing uniformity or targeted exemptions.