wa-law.org > bill > 2025-26 > HB 2297 > Substitute Bill
The legislature finds that access to affordable, nutritious, and culturally relevant food is essential to health, economic stability, and community well-being. Yet many Washington residents, particularly low-income households, communities of color, rural residents, immigrants and refugees, and people with limited transportation options continue to face barriers to food access due to store closures, uneven infrastructure, and long-standing patterns of disinvestment.
It is the intent of the legislature to provide locally controlled tools to preserve existing grocery stores and support the development and retention of grocery stores in underserved communities where market forces alone have not met community needs. By reducing structural cost barriers, this act is intended to strengthen community-serving food retailers and support local jobs and neighborhood stability. The legislature further intends that these incentives be implemented in a manner responsive to local conditions and as part of a broader effort to promote health equity, economic justice, and long-term community stability.
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The cities, working through the association of Washington cities, shall form a model ordinance development committee made up of a representative sampling of cities that as of July 27, 2003, impose a business and occupation tax. This committee shall work through the association of Washington cities to adopt a model ordinance on municipal gross receipts business and occupation tax. The model ordinance and subsequent amendments shall be adopted using a process that includes opportunity for substantial input from business stakeholders and other members of the public. Input shall be solicited from statewide business associations and from local chambers of commerce and downtown business associations in cities that levy a business and occupation tax.
The department of commerce shall contract to post the model ordinance on an internet website and to make paper copies available for inspection upon request. The department of revenue and the department of licensing shall post copies of or links to the model ordinance on their internet websites. Additionally, a city that imposes a business and occupation tax must make copies of its ordinance available for inspection and copying as provided in chapter 42.56 RCW.
The definitions and tax classifications in the model ordinance may not be amended more frequently than once every four years, however the model ordinance may be amended at any time to comply with changes in state law. Any amendment to a mandatory provision of the model ordinance must be adopted with the same effective date by all cities.
A city that imposes a business and occupation tax must adopt the mandatory provisions of the model ordinance. The following provisions are mandatory:
A system of credits that meets the requirements of RCW 35.102.060 and a form for such use;
A uniform, minimum small business tax threshold of at least the equivalent of twenty thousand dollars in gross income annually. A city may elect to deviate from this requirement by creating a higher threshold or exemption but it shall not deviate lower than the level required in this subsection. If a city has a small business threshold or exemption in excess of that provided in this subsection as of January 1, 2003, and chooses to deviate below the threshold or exemption level that was in place as of January 1, 2003, the city must notify all businesses licensed to do business within the city at least one hundred twenty days prior to the potential implementation of a lower threshold or exemption amount;
Tax reporting frequencies that meet the requirements of RCW 35.102.070;
Penalty and interest provisions that meet the requirements of RCW 35.102.080 and 35.102.090;
Claim periods that meet the requirements of RCW 35.102.100;
Refund provisions that meet the requirements of RCW 35.102.110; and
Definitions, which at a minimum, must include the definitions enumerated in RCW 35.102.030 and 35.102.120. The definitions in chapter 82.04 RCW shall be used as the baseline for all definitions in the model ordinance, and any deviation in the model ordinance from these definitions must be described by a comment in the model ordinance.
Except for the deduction required by RCW 35.102.160 and the system of credits developed to address multiple taxation under subsection (2)(a) of this section, a city may adopt its own provisions for tax exemptions, tax credits, preferential rates, and tax deductions.
Any city that adopts an ordinance that deviates from the nonmandatory provisions of the model ordinance shall make a description of such differences available to the public, in written and electronic form.
The taxing authority granted to cities for taxes upon business activities measured by gross receipts or gross income from sales shall not exceed a rate of .0020; except that any city with an adopted ordinance at a higher rate, as of January 1, 1982 shall be limited to a maximum increase of ten percent of the January 1982 rate, not to exceed an annual incremental increase of two percent of current rate: PROVIDED, That any adopted ordinance which classifies according to different types of business or services shall be subject to both the ten percent and the two percent annual incremental increase limitation on each tax rate: PROVIDED FURTHER, That all surtaxes on business and occupation classifications in effect as of January 1, 1982, shall expire no later than December 31, 1982, or by expiration date established by local ordinance. Cities which impose a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property which are measured by gross receipts or gross income from such sales shall be required to submit an annual report to the state auditor identifying the rate established and the revenues received from each fee or tax. This section shall not apply to any business activities subject to the tax imposed by chapter 82.16 RCW. For purposes of this section, the providing to consumers of competitive telephone service, as defined in RCW 82.04.065, or the providing of payphone service, shall be subject to tax at the same rate as business activities consisting of the making of retail sales of tangible personal property. As used in this section, "payphone service" means making telephone service available to the public on a fee-per-call basis, independent of any other commercial transaction, for the purpose of making telephone calls, when the telephone can only be activated by inserting coins, calling collect, using a calling card or credit card, or dialing a toll-free number, and the provider of the service owns or leases the telephone equipment but does not own the telephone line providing the service to that equipment and has no affiliation with the owner of the telephone line.
The tax levied by RCW 82.08.020 does not apply to sales of investigation and security services subject to the tax imposed in RCW 82.04.050 to grocery stores located in underserved community zones as defined in section 302 of this act.
A person claiming a remittance under this section must pay the state and local sales and use tax on such sales and apply to the department for a remittance of the tax paid.
The remittance is equal to 100 percent of state and local sales tax paid.
To receive a remittance under this section, a person must submit:
A remittance application in a form and manner as required by the department;
An information sheet, in a form and manner as required by the department, specifying the amount of exempted tax claimed and the qualifying purchases or acquisitions for which the remittance is claimed; and
Any other documentation supporting the remittance application.
A person may not apply for more than one remittance under this section in a calendar quarter.
The department must rule on the application within 90 days, except that the department may extend the time of processing such application upon providing notice to the person that ruling on the application cannot be completed within such time.
The provisions of this chapter do not apply with respect to the use of investigation and security services subject to the tax imposed in RCW 82.12.020 by grocery stores located in underserved community zones as defined in section 302 of this act.
A person claiming a remittance under this section must pay the state and local sales and use tax on such sales and apply to the department for a remittance of the tax paid.
The conditions and requirements of section 201 of this act apply to this section.
The purpose of this chapter is to provide local communities options to preserve and increase access to healthy and affordable food for Washingtonians living in underserved communities. It is also the purpose of this chapter to encourage grocery retailers to maintain their presence in underserved communities and to incentivize the construction of new stores in underserved areas based on community needs.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"City" means any city or town.
"Frontier county" means a rural county with a population density of fewer than 50 persons per square mile as determined by the office of financial management and published each year by the department for the period July 1st to June 30th.
"Governing authority" means the local legislative authority of a city or county having jurisdiction over the property for which an exemption may be applied under this chapter.
"Grocery store" means a small food retailer, a mid-sized food retailer, or a supermarket.
"Mid-sized food retailer" means a medium-sized retail outlet with at least 2,500 but less than 16,000 square feet, of which at least 75 percent is occupied by food and related products.
"Owner" means the property owner of record.
"Rural census tract" means a census tract with a population-weighted centroid that is not within a census urban area as classified by the United States census bureau for the most recent decennial census.
"Rural county" means a county with a population density of fewer than 100 persons per square mile or a county smaller than 225 square miles, as determined by the office of financial management and published each year by the department for the period July 1st to June 30th.
"Small food retailer" means a retail outlet with less than 2,500 square feet that sells a limited selection of foods and other products, such as a bodega, convenience store, corner store, neighborhood store, small grocery, or small-scale store.
"Supermarket" means a retail outlet with at least 16,000 square feet, of which at least 90 percent is occupied by food and related products.
"Urban census tract" means a census tract with a population-weighted centroid that is within a census urban area as classified by the United States census bureau for the most recent decennial census.
"Underserved community zone" means an area of land designated by a governing authority in this chapter.
"Urban county" means a county that is not a rural county as determined by the office of financial management and that is located in a metropolitan statistical area as determined and defined by the United States office of management and budget or other appropriate agency or office of the federal government.
A city governing authority may by ordinance or resolution establish an underserved community grocery store property tax exemption program to provide property tax exemptions to preserve existing grocery stores, to incentivize the rehabilitation of existing or vacant grocery store buildings, and to incentivize the construction of new grocery store buildings in underserved communities.
A county governing authority may by ordinance or resolution establish an underserved community grocery store property tax exemption program for unincorporated areas to provide property tax exemptions to preserve existing grocery stores, to incentivize the rehabilitation of existing or vacant grocery store buildings, and to incentivize the construction of new grocery store buildings in underserved communities.
An underserved community grocery store property tax exemption program established by a governing authority may offer one or more property tax exemptions for the following categories of grocery stores located within an underserved community zone designated by the governing authority pursuant to section 305 of this act:
Existing grocery stores;
Rehabilitated grocery stores; or
Newly constructed grocery stores.
For the purpose of creating an underserved community grocery store property tax exemption program, the governing authority of a city or county must adopt a resolution of intent to create an underserved community grocery store property tax exemption program and designate one or more areas as underserved community zones as generally described in the resolution. The resolution must state the time and place of a hearing to be held by the governing authority to consider the creation of the program and the designation of the zones and may include such other information pertaining to the creation of the program and the designation of the zones as the governing authority determines to be appropriate to apprise the public of the action intended. However, the resolution must provide information pertaining to:
The application process;
The approval process;
The appeals process for applications denied approval; and
Requirements, conditions, and obligations that must be followed postapproval of an application.
The governing authority must give notice of a hearing held under this chapter by publication of the notice once each week for two consecutive weeks, not less than seven days, nor more than 30 days before the date of the hearing in a paper having a general circulation in the city or county. The notice must state the time, date, place, and purpose of the hearing and generally identify the area or areas proposed to be designated as an underserved community zone.
Following the hearing or a continuance of the hearing, and subject to the limit on underserved community zones in section 305 of this act, the governing authority may create the program and designate all or a portion of the area or areas described in the resolution of intent as an underserved community zone or zones if it finds, in its sole discretion, that the criteria in section 305 of this act have been met.
Except as otherwise provided in this section, the governing authority of a county may designate an underserved community zone if it determines that a census tract or contiguous group of census tracts within the city's or county's jurisdiction meets the following requirements:
The area must meet one or more low-income criteria and the low-access criterion; or
The area must meet the criterion for health disadvantaged areas and the low-access criterion; or
The area must meet the criterion for a low-transportation-access area.
The governing authority of a county, when designating an underserved community zone, must consider designating zones in areas with the highest disparities and where the highest number of Washingtonians will be positively affected.
A city may apply to the governing authority of a county to request the creation of an underserved community zone using an application process designated by the county.
For a property tax exemption for an existing grocery store, as an alternative to meeting the requirements in subsection (1) of this section, a governing authority must establish that without the creation of an underserved community tax incentive program and the designation of an underserved community zone, the area will meet the requirements of subsection (1) of this section due to the closure of an existing grocery store.
A governing authority may use an alternative methodology for the identification of underserved areas and the creation of an underserved community zone that fits its community's needs if the methodology and accompanying data is submitted to and it is approved by the department of commerce.
The total underserved community zone designations allowed per county are as follows:
For urban counties, a maximum of 10 underserved community zones;
For rural counties that are not frontier counties, a maximum of five underserved community zones; and
For frontier counties, a maximum of three underserved community zones.
Five years after the establishment of an underserved community zone and every five years thereafter, a governing authority may add, remove, or alter the boundaries of an underserved community zone. The governing authority must provide the department of commerce with the methodology and reasoning for the change in the zone location.
The removal or altering of an underserved community zone does not disqualify any existing property tax exemptions granted under this chapter.
The governing authority must provide information regarding the location of the designated zones to the department of commerce.
Low-income criteria are as follows:
Each census tract within the area meets one or more income criteria used in the food access research atlas published by the United States department of agriculture; or
Twenty-five percent or more of the population in each census tract within the area has an income at or below 200 percent of poverty thresholds reflected in the most recently available five-year American community survey estimates.
To meet the criteria for a health disadvantaged area, each census tract in the area must have an index score of eight or above on the most recently published department of health environmental health disparities map index, indicating the highest composite levels of health disadvantage based on a combination of environmental, health, socioeconomic, and demographic factors.
To meet the criteria for a low-access area, at least 500 people within each tract or 33 percent of the population within each tract must reside more than 0.5 miles from the nearest grocery store for an urban census tract or greater than 10 miles from the nearest grocery store for a rural census tract.
To meet the criteria for a low-transportation-access area:
Each urban census tract in the area has more than 100 households that do not have access to a vehicle, according to the most recently published five-year American community survey estimate, and reside more than 0.5 miles from the nearest grocery store; or
In each census tract in the area, at least 500 people or 33 percent of the population live more than 20 miles from the nearest grocery store for a rural census tract.
The value of real property qualifying under this chapter is exempt from local and state property taxation under this title as provided in this chapter.
For existing grocery stores, the value of the real property consisting of a grocery store building or a portion of a building used as a grocery store within an underserved community zone as identified by a governing authority is exempt from taxation for properties for which an application for a certificate of tax exemption is submitted and approved under this chapter. The value is exempt under this section for 30 successive years beginning January 1st of the year immediately following the calendar year of issuance of the certificate.
For rehabilitated grocery stores, the value of the new construction and the value of the real property consisting of a grocery store or a portion of a building used as a grocery store within an underserved community zone as identified by a governing authority is exempt from taxation for properties for which an application for a certificate of tax exemption is submitted under this chapter. The value is exempt under this section for 30 successive years beginning January 1st of the year immediately following the calendar year of issuance of the conditional certificate. If a final certificate is not issued due to a denial under section 309(4) of this act, taxes are immediately due and payable by the property owner under section 312(4) of this act.
For newly constructed grocery stores, the value of the new construction consisting of a grocery store or a portion of a building used as a grocery store within an underserved community zone as identified by a governing authority is exempt from taxation for properties for which an application for a certificate of tax exemption is submitted and approved under this chapter. The value is exempt under this section for 30 successive years beginning January 1st of the year immediately following the calendar year of issuance of the conditional certificate. If a final certificate is not issued due to a denial under section 309(4) of this act, taxes are immediately due and payable by the property owner under section 312(4) of this act.
The exemptions provided in this section do not include the value of real property not qualifying under this chapter and do not apply to the value of the land.
The exemptions provided in this section do not apply to increases in assessed valuation made by the assessor on nonqualifying portions of building and value of land nor to increases made by lawful order of a county board of equalization, the department, or a county to a class of property throughout the county or specific area of the county to achieve the uniformity of assessment or appraisal required by law.
The real property consisting of an existing grocery store, a rehabilitated grocery store, or newly constructed grocery store must be located in an underserved community zone as identified by the governing authority under section 305 of this act on the date the tax exemption certificate is granted to the owner by the governing authority.
Rehabilitated and new construction grocery stores must:
Meet all construction and development regulations of the city or county; and
Be party to a contract with the city or county approved by the governing authority under which the applicant has agreed to the implementation of the development on terms and conditions satisfactory to the governing authority.
The exemptions provided in this section do not apply to property taxes levied by school districts.
The exemption provided in this section is in addition to any other exemptions, deferrals, credits, grants, or other tax incentives provided by law.
At the conclusion of the exemption period, the value of new construction and rehabilitative improvements to the property must be considered as new construction for the purposes of chapters 84.55 and 36.21 RCW.
An owner of a property seeking an exemption under this chapter must complete the following procedures:
The owner must apply to the city or county on forms adopted by the governing authority. The application must contain the following:
Information setting forth the grounds supporting the requested exemption including information indicated on the application form or required by this chapter;
For rehabilitation projects and new construction, a description of the site plan, a statement that the applicant would not have built in this location but for the availability of the tax exemption under this chapter, and other information requested; and
A statement that the applicant is aware of the potential tax liability involved when the property ceases to be eligible for the incentive provided under this chapter;
The applicant must verify the application by oath or affirmation; and
The application must be accompanied by the application fee, if any, required under this chapter. The governing authority may permit the applicant to revise an application before final action by the governing authority.
The city or county may approve the application if it finds that:
The existing grocery store, the rehabilitated grocery store, or the newly constructed grocery store will provide fresh and affordable groceries to an underserved community located in an underserved community zone and complies with any city or county requirements to accept supplemental nutrition assistance program benefits or Washington basic food benefits or participate in applicable local, state, or federally supported fruit and vegetable nutrition incentive programs including, but not limited to, fresh bucks, fruit and vegetable prescription programs, or similar incentive programs that increase purchasing power for fruits and vegetables;
For rehabilitated or newly constructed grocery stores, the proposed project is, or will be, at the time of completion, in conformance with all local plans and regulations that apply at the time the application is approved; and
The criteria of this chapter have been satisfied.
The city or county must approve or deny an application filed under this chapter within 90 days after receipt of the application.
If the application is denied by the city or county, the city or county must state in writing the reasons for denial and send the notice to the applicant at the applicant's last known address within 10 days of the denial.
Upon denial by the city or county, an applicant may appeal the denial to the city's or county's governing authority within 30 days after receipt of the denial. The appeal before the city's or county's governing authority must be based upon the record made before the governing authority with the burden of proof on the applicant to show that there was no substantial evidence to support the decision. The decision of the city's or county's governing authority in denying or approving the application is final.
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If the application for a rehabilitated grocery store or a newly constructed grocery store is approved, the city or county must issue the owner of the property a conditional certificate of tax exemption. The certificate must contain a statement by a duly authorized administrative official of the governing authority that the property has complied with the required criteria of this chapter.
The city or county must file the conditional certificate of tax exemption with the county assessor within 10 days of approval.
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If the application for an existing grocery store is approved, the city or county must issue the owner of the property a certificate of tax exemption. The certificate must contain a statement by a duly authorized administrative official of the governing authority that the property has complied with the required criteria of this chapter.
The city or county must file the certificate of tax exemption with the county assessor within 10 days of approval.
Upon completion of a rehabilitation project or new construction of a grocery store building for which an application for an exemption under this chapter has been approved and issued a certificate of occupancy, the owner must file with the city or county the following:
A description of the work that has been completed and a statement that the new construction on the owner's property qualifies the property for a partial or total exemption under this chapter; and
A statement regarding the fresh food and new jobs offered as a result of the new construction of the grocery store.
Within 30 days after receipt of the statements required under subsection (1) of this section, the city or county must determine whether the work completed is consistent with the application approved by the city or county and whether the property qualifies for a tax exemption under this chapter.
If the criteria of this chapter have been satisfied and the owner's property is qualified for a tax exemption under this chapter, the city or county must file the certificate of tax exemption with the county assessor within 40 days after receipt of the statements required under subsection (1) of this section.
The city or county must notify the applicant that a certificate of tax exemption is denied if the city or county determines that:
The work was not constructed consistent with the application or other applicable requirements; or
The owner's property is otherwise not qualified for an exemption under this chapter.
The city's or county's governing authority may enact an ordinance to provide a process for an owner to appeal a decision by the city or county that the owner is not entitled to a certificate of tax exemption to the city or county. The owner may appeal a decision by the city or county to deny a certificate of tax exemption in superior court under RCW 34.05.510 through 34.05.598 if the appeal is filed within 30 days of notification by the city or county to the owner of the exemption denial.
The governing authority may establish an application fee for the tax exemption under this chapter. This fee may not exceed an amount determined to be required to cover the cost to be incurred by the governing authority and the assessor in administering this chapter. The application fee must be paid at the time the application is filed. If the application is approved, the governing authority of the city or county must pay the application fee to the county assessor for deposit in the county current expense fund, after first deducting that portion of the fee attributable to its own administrative costs in processing the application. If the application is denied, the city's or county's governing authority may retain that portion of the application fee attributable to its own administrative costs and refund the balance to the applicant.
Thirty days after the anniversary of the date of the certificate of tax exemption and each year for the tax exemption period, the owner of the exempted property must file with a designated authorized representative of the city or county an annual report indicating the following:
A certification by the owner that the property has not changed use that is, if the owner of the property and the retailer are not the same individual, verified by the grocery store retailer;
A description of changes or improvements constructed after issuance of the certificate of tax exemption; and
Any additional information requested by the city or county.
A city or county that issues a certificate of tax exemption under this chapter must report annually by December 31st of each year, beginning in 2026, to the department of commerce. The report must include the following information:
The number of tax exemption certificates granted;
The total number and type of existing buildings exempted, and the total number and type of rehabilitated and new grocery stores constructed;
The value of the tax exemption for each project receiving a tax exemption and the total value of tax exemptions granted;
The methodology and data used by the governing authority when designating underserved community zones; and
An explanation of how the program is working to supply fresh and healthy food and new or ongoing job opportunities to underserved communities.
A city or county that issues a certificate of tax exemption under this chapter must annually provide a report to the department of revenue that provides the information required in subsection (2) of this section and any other information that the department of revenue requires to verify eligibility for the business and occupation tax incentives created in sections 401 and 501 of this act.
If the value of the real property or real property improvements have been exempted under this chapter, the real property and real property improvements continue to be exempted for the applicable period under this chapter so long as they are not converted to another use and continue to satisfy all applicable conditions including, but not limited to, zoning, land use, and building requirements.
Transfer of property ownership does not terminate the exemption. The exemption is subject to the successor meeting the eligibility requirements under this chapter. The transferor of an exempted property must notify the governing authority of the transfer. The governing authority must certify that the successor meets the requirements of the exemption. The transferor must provide the information necessary for the county assessor to transfer the exemption. If the transferor fails to notify the city or county within 60 days, the tax exemption is terminated and all exempted property taxes from the date of the transfer are immediately due and payable by the transferor as required in subsection (4) of this section.
If an owner voluntarily opts to discontinue compliance with the requirements of this chapter, the owner must notify the county assessor within 60 days of the change in use or intended discontinuance and all exempted property taxes from the date of the initial exemption are immediately due and payable by the transferor as required in subsection (4) of this section.
If, after a certificate of tax exemption has been filed with the county assessor, the city or county discovers that a portion of the property has changed or will be changed to disqualify the property for exemption eligibility under this chapter, the tax exemption must be canceled, and the following occurs:
Additional real property tax must be imposed on the value of the nonqualifying improvements in the amount that would be imposed if an exemption had not been available under this chapter, plus a penalty equal to 20 percent of the additional value. This additional tax is calculated based upon the difference between the property tax paid and the property tax that would have been paid if it had included the value of the nonqualifying improvements dated back to the date that the improvements were converted to a nonqualifying use;
Interest upon the amounts of the additional tax at the same statutory rate charged on delinquent property taxes must be included from the dates on which the additional tax could have been paid without penalty if the improvements had been assessed at a value without regard to this chapter; and
The additional tax owed together with interest and penalty becomes a lien on the property and attaches at the time the property or portion of the property is removed from the qualifying use under this chapter, or the amenities no longer meet the applicable requirements for exemption under this chapter. A lien under this section has priority to, and must be fully paid and satisfied before, a recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which the property may become charged or liable. The lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes. An additional tax unpaid on its due date is delinquent. From the date of delinquency until paid, interest must be charged at the same rate applied by law to delinquent property taxes.
Upon a determination that a tax exemption is to be terminated for a reason stated in this section, the city's or county's governing authority must notify the record owner of the property as shown by the tax rolls by mail, return receipt requested, of the determination to terminate the exemption. The owner may appeal the determination to the city or county, within 30 days by filing a notice of appeal with the city or county, which notice must specify the factual and legal basis on which the determination of termination is alleged to be erroneous. At an appeal hearing, all affected parties may be heard and all competent evidence received. After the hearing, the deciding body or officer must either affirm, modify, or repeal the decision of termination of exemption based on the evidence received. An aggrieved party may appeal the decision of the deciding body or officer to the superior court as provided in RCW 34.05.510 through 34.05.598.
Upon determination by the city or county to terminate an exemption, the county officials having possession of the assessment and tax rolls must correct the rolls in the manner provided for omitted property under RCW 84.40.080. The county assessor must make such a valuation of the property and improvements as is necessary to permit the correction of the rolls. The value of the new construction from the rehabilitated grocery store or the newly constructed grocery store added to the rolls is considered new construction for the purposes of chapter 84.40 RCW. The owner may appeal the valuation to the county board of equalization as provided in chapter 84.40 RCW. If there has been a failure to comply with this chapter, the property must be listed as an omitted assessment for assessment years beginning January 1st of the calendar year in which the noncompliance first occurred, but the listing as an omitted assessment may not be for a period more than three calendar years preceding the year in which the failure to comply was discovered.
This chapter expires January 1, 2037.
Beginning January 1, 2027, a person is allowed a credit against the tax imposed in this chapter equal to 0.029 percent multiplied by the gross income of a grocery store operating in an underserved community zone.
To qualify for this credit, a grocery store must be located in an underserved community zone established in section 305 of this act. The credit applies only to the gross income of the grocery store located in the underserved community zone.
Cities and counties with established underserved community grocery store property tax exemption programs must annually provide a report to the department that includes the established underserved community zone boundaries within their jurisdiction and any other information required by the department to verify taxpayer eligibility under this section.
The credit claimed may not exceed the tax that would otherwise be due under this chapter. Refunds may not be granted in the place of credits. Any amount of credit earned under this section not claimed by the person in one calendar year may be carried forward for no more than one calendar year immediately following the year that the credit was earned and may be used until January 1, 2038.
The total amount of credit authorized under this section may not exceed an annual statewide limit of $5,000,000 per calendar year.
Credits are available on a first-in-time basis. The department must disallow any credits, or portion thereof, that would cause the total amount of credits claimed under this section during any calendar year to exceed $5,000,000. The department must provide notification on its website monthly on the number of credits that have been applied for, the number issued, and the number remaining before the statewide annual limit is reached. In addition, the department must provide written notice to any person who has applied to claim tax credits in excess of the limitation in this subsection.
No refunds may be granted for credits under this section.
For the purposes of the limits provided in this section, a credit must be counted against such limits for the calendar year in which the credit is earned.
To claim a credit under this section, the person applying must complete an application for the credit as required by the department. A person must also electronically file with the department all returns, forms, and other information the department requires in an electronic format as provided and approved by the department. Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format. For purposes of this subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Grocery store" has the same meaning as in section 302 of this act.
"Underserved community zone" means an underserved community zone established in section 305 of this act.
This section expires January 1, 2037.
This chapter does not apply to any person engaging within this state in the business as a consumer-owned, cultural, employee-owned, locally owned, or union-represented grocery store that operates in an underserved community zone established in section 305 of this act.
Cities and counties with established underserved community grocery store property tax exemption programs must annually provide a report to the department of revenue that includes the established underserved community zone boundaries and any other information required by the department of revenue to verify taxpayer eligibility under this section.
For purposes of this section, the following definitions apply:
"Consumer-owned grocery store" means a grocery store in which a significant portion of the ownership is held by customers, such as, but not limited to, through purchase of membership that qualifies as a controlling stake, or cooperative ownership.
"Cultural grocery store" means a grocery store whose sales of culturally relevant food or items make up a minimum of 40 percent of the store's total annual sales the year before the exemption in this section is taken.
"Employee-owned grocery store" means a grocery store in which a significant portion of the ownership is held by employees.
"Grocery store" has the same meaning as in section 302 of this act.
"Locally owned" means a grocery store that is family-owned or privately held.
"Underserved community zone" means an underserved community zone established in section 305 of this act.
"Union-represented grocery store" means a grocery store that is party to a collective bargaining agreement with a labor organization representing the grocery store's nonsupervisory employees.
This section expires January 1, 2037.
This section is the tax preference performance statement for the tax preferences contained in sections 301 through 312, 401, and 501, chapter . . ., Laws of 2026 (sections 301 through 312, 401, and 501 of this act). This performance statement is only intended to be used for subsequent evaluation of the tax preferences. It is not intended to create a private right of action by any party or to be used to determine eligibility for preferential tax treatment.
The legislature categorizes these tax preferences as ones intended to provide tax relief for certain businesses or individuals, as indicated in RCW 82.32.808(2)(e).
It is the legislature's specific public policy objective to provide reduced tax liability for businesses that operate grocery stores in underserved communities.
If a review finds that after the effective date of these tax preferences the following parameters are met, then the legislature intends to extend the expiration date of these tax preferences:
The number of grocery stores operating in underserved community zones has increased;
The number of jobs created in grocery stores located in or constructed in underserved community zones has increased;
The amount of fresh food offered in grocery stores located in underserved community zones has increased; and
Any number of grocery stores operating in underserved community zones have avoided closure since the effective date of this section.
In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state.
RCW 82.32.805 and 82.32.808 do not apply to sections 201 and 202 of this act.
Sections 301 through 312 of this act apply to taxes levied for collection in 2027 and thereafter.
This act takes effect January 1, 2027.