WashingtonWashington will tax some large lenders’ mortgage interest for wildfire funding
Starting July 1, 2026, qualifying mortgage lenders pay tax on certain home loan interest, with estimated added revenue transferred each year to Washington’s wildfire response account.
What it does
Beginning July 1, 2026, Washington taxes interest on certain home loans from high-volume mortgage lenders. The rule also includes certain mortgage servicing fees.
Each year, the state treasurer transfers estimated added revenue from the mortgage tax rule to Washington’s wildfire response account.
Argument forThe annual transfers could give Washington’s wildfire response account more money when the mortgage tax rule brings in added state revenue.
Argument againstLenders might pass some tax costs to home borrowers, since the tax applies to interest on certain residential mortgages.
More detail
Washington taxes certain mortgage interest and related servicing fees under its business and occupation tax. The tax applies to amounts received on loans originated by a qualifying lender or its affiliate and mainly secured by a first mortgage or trust deed on a home that is not temporary lodging. A lender qualifies if it is a specified financial institution under state law or reported at least $10 billion in closed mortgage originations in the previous calendar year. The tax rule also treats certain mortgage servicing fees as interest. This tax rule takes effect July 1, 2026.
The state treasurer transfers estimated added tax revenue to the wildfire response account. Each estimate and transfer concerns the added state revenue for the immediately preceding fiscal year. The Department of Revenue estimates the increase in state general fund revenue tied to the mortgage tax rule and promptly notifies the treasurer. The treasurer transfers the estimated amount, and the department may not adjust that estimate after the transfer. The department must begin estimating revenue by October 15, 2027. The treasurer must begin transfers by November 1, 2027, and both duties recur each year.
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Where it stands
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Mar 23Effective date 7/1/2026.Latest
- Mar 23Chapter 131, 2026 Laws.Major
- Mar 23Governor Bob Ferguson signed.Became Law
- Mar 12Delivered to Governor.To Governor
- Mar 11President signed.Passed Senate
- Vote recorded 3rd Reading & Final Passage (#11). Result: pass.Upper
- Mar 11Speaker signed.Passed House
- Mar 11Third reading, passed; yeas, 27; nays, 21; absent, 1; excused, 0.Minor
- Mar 11Rules suspended. Placed on Third Reading.Minor
- Mar 11Placed on second reading by Rules Committee.Minor
- Mar 2Passed to Rules Committee for second reading.
- Mar 2Minority; do not pass.Minor
- Mar 2WM - Majority; do pass.Minor
- Mar 2Executive action taken in the Senate Committee on Ways & Means at 10:30 AM.
- Feb 24Public hearing in the Senate Committee on Ways & Means at 4:00 PM.
- Feb 17First reading, referred to Ways & Means.Minor
- Feb 13Third reading, passed; yeas, 52; nays, 40; absent, 0; excused, 6.Minor
- Vote recorded 3rd Reading & Final Passage (#38). Result: pass.Lower
- Feb 13Rules suspended. Placed on Third Reading.Minor
- Feb 131st substitute bill substituted (FIN 26).Major
- Feb 12Rules Committee relieved of further consideration. Placed on second reading.Minor
- Feb 9Referred to Rules 2 Review.Minor
- Feb 9Minority; do not pass.Minor
- Feb 9FIN - Majority; 1st substitute bill be substituted, do pass.Major
- Feb 9Executive action taken in the House Committee on Finance at 8:00 AM.
- Feb 4Executive session scheduled, but no action was taken in the House Committee on Finance at 4:00 PM.
- Jan 23Public hearing in the House Committee on Finance at 1:30 PM.
- Jan 12First reading, referred to Finance.Minor
- 2025
- Dec 2Prefiled for introduction.Introduced
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