Advocacy News & Resources

HB 2559 and Short-Term Rentals in Washington: Impacts on Hosts and Service Providers

An overview of the reintroduced short-term rental tax proposal (formerly HB 1763), what it would do, and why it matters to Washington’s short-term rental community.

Overview

HB 2559 is a proposed Washington State bill reintroduced this session as the successor to HB 1763, which was considered during the 2025 legislative session but did not advance to a final vote before session adjournment. Under Washington’s legislative process, bills that do not pass are automatically eligible for reintroduction in the next session.

HB 2559 would allow cities, towns, and counties to impose a new local excise tax of up to 4% on short-term rental bookings. The tax would apply only to short-term rentals—not hotels or motels—and would be layered on top of existing state and local lodging taxes.

While the bill is framed as a funding mechanism for affordable housing programs, its structure places new costs on hosts and guests, singles out one segment of the lodging market, and places a long-term burden on the short-term rental ecosystem.

What This Bill Does

If adopted by a local jurisdiction, HB 2559 would:

• Authorize a local excise tax of up to 4% on short-term rental bookings
• Apply the tax exclusively to short-term rentals, exempting hotels and motels
• Direct revenue to cities and counties for housing-related programs, with up to 15% allowed for administrative costs

Although the tax would be adopted locally, it would be collected through state-administered systems, and its costs are expected to be passed on to guests, affecting booking demand and host income.

Why We Oppose HB 2559

We oppose HB 2559 because it places new and unfair burdens on short-term rental hosts and Washington families without meaningfully addressing housing affordability.

In particular, the bill:

• Harms small, local hosts, many of whom rely on short-term rental income to help cover mortgages and the state’s high cost of living
• Raises costs for Washington residents, who make up roughly half of all short-term rental guests in the state and often rely on STRs for affordable, flexible, and longer-term stays
• Singles out short-term rentals for a new tax that does not apply to hotels or motels, creating an uneven playing field in the lodging economy
• Sets a precedent for state-level taxation that targets short-term rentals specifically, increasing the risk of future expansion or additional taxes
• Generates limited revenue relative to its impact, raising an estimated $22 million statewide, while the average cost to build a single affordable housing unit exceeds $250,000

Taken together, these impacts increase operating risk for hosts and service providers while offering no guarantee of meaningful progress on housing supply.

Bottom Line

Housing affordability is a serious challenge in Washington, but HB 2559 places the burden on one segment of the lodging economy rather than pursuing comprehensive, equitable solutions. The bill raises costs for residents, reduces host income, and undermines responsible home sharing while setting a precedent that could shape future taxation of short-term rentals across the state.