The House Finance Committee voted HB 2559, the local option short-term rental tax, out of its committee and on to the next step. This is a good time for cities to let your House members know that you support this bill if you are interested in this new tool to offset the impacts of vacation rentals on your long-term housing markets. The industry is weighing in heavily with concerns that this tax will ruin vacations as we know them, so support from cities is going to be critical for the bill to continue advancing. Again, if passed, cities could choose to adopt this tax or not, with revenues dedicated to affordable housing in their communities.

Local option short-term rental tax bill returns

January 16, 2026

Coming back for a second attempt, HB 2559 was introduced last session (as HB 1763) to propose a local option, short-term rental tax. Its Senate companion bill (SB 5576) from Sen. Liz Lovelett (D–Anacortes) stalled in the House Rules Committee last year due, in part, to concerns from short-term rental hosts and competition with other tax measures under consideration. Both bills have removed the state tax portion of the proposal.

The House version, sponsored by Rep. Lisa Parshley (D–Olympia), is off to a quick start this session, with a hearing scheduled during the second week. It’s our understanding that HB 2559 will be the lead vehicle, and it does the following:

• Adds a 4% excise tax on short-term rental lodging advertised through a web platform; and
• Allows local governments to receive the revenue generated in their jurisdiction.

Authorized expenditures include operating and capital costs of affordable housing programs including, but not limited to, homeless housing assistance, temporary shelters, and other related services, as well as housing infrastructure projects.

The bill will help tourism-dependent communities address housing affordability challenges in their cities. AWC looks forward to testifying in support of the bill in committee.

Date to remember

HB 2559 is scheduled for public hearing in the House Finance Committee on Tuesday, January 20, at 8 am.