A small bright spot in Washington’s tax code

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A small bright spot in Washington’s tax code

We’re smarter than many states when it comes to senior property tax exemptions

By - July 26, 2019

Earlier this year, Washington state lawmakers wisely expanded a senior property tax exemption program so that it provides better protection against unaffordable property tax bills for low-income seniors, especially those living in areas with rapidly escalating home values. While not perfect, the program effectively provides property tax assistance to those who would most benefit without breaking the bank. It’s one component of our otherwise worst-in-the-nation tax code – in which people with the least pay the most in state and local taxes as a share of their incomes – that Washingtonians can be proud of.

Further, the program is smarter and more equitable than the senior tax preferences in many other states. According to a new report from the Center on Budget and Policy Priorities, a number of other states spend billions of state dollars per year offering expensive, open-ended tax cuts to all seniors, regardless of their annual incomes or total net worth. Such overly generous senior tax preferences greatly hamper states’ ability to fund schools, health care, childcare, infrastructure, and other investments that benefit all residents. As the report states, “[g]iving additional tax breaks to younger, wealthier seniors who don’t need them strains state budgets, especially given the other programs and services that state budgets must fund, including for the elderly.”

By contrast, here in Washington, we offer a more sensible, targeted approach. Currently, very low-income seniors, veterans, and people with disabilities – those earning $40,000 per year or less – are allowed partial exemptions against their state and local property taxes.

Thanks to the legislature’s work this year, the program will be expanded in 2020 so that seniors with incomes below 65% of county median income (about $58,500 per year in King County) will be eligible for these exemptions. This means more seniors with low or fixed incomes will now be able to receive a property tax cut to help them deal with our state’s rising cost of living.

To be clear, the program currently isn’t as effective as it should be. Notably, seniors who rent, rather than own their homes, still end up paying property taxes that landlords opaquely build into the rents they charge. That’s why the property tax safeguard rebate proposal that the Budget & Policy Center has long proposed is a better way to keep property taxes manageable for seniors with low incomes as well as for other lower- and moderate-income homeowners and renters.

Even so, the newly expanded senior property tax exemption program is a bright spot in our tax code. It balances the need to fund the community services we all rely on with the need to help older generations remain in the homes they love.

About Andy Nicholas, Associate Director of Fiscal Policy

Andy specializes in state budget and tax policy. Since joining the Budget & Policy Center in 2009, he has served on a Legislative Task Force on Tax Preference Reform and has conducted numerous analyses of Washington state’s tax code.

Read more about Andy