Washington is debating a bill that would make short-term rentals more expensive to fund affordable housing initiatives.

After a similar effort failed last session, the Legislature is once again considering a controversial bill allowing local governments to tax short-term rentals up to 4% — which would be $8 on a $200-a-night stay.

Short-term rental owners who rent out fewer than three rooms at a time and live in the home at least half the year would be exempt, based on the state’s definition of short-term rentals.

Proceeds from the tax would go toward building and maintaining affordable housing as well as rental assistance programs — initiatives local governments are struggling to fund amid budget squeezes.

Last year, the Washington Department of Revenue estimated local jurisdictions would collect a combined $21 million in the first year of collections if a bill allowing the tax passed.

If passed, the law would take effect April 1, 2027.

The proposal follows a longtime debate over the impact of short-term rentals on Washington’s local communities. Some argue that short-term rentals reduce long-term housing stock, especially in tourist destinations, while others say they are an essential driver of economic activity and source of income for many.

Rep. Lisa Parshley, D-Olympia, who sponsored House Bill 2559, said her goal is not to reduce the number of short-term rentals in Washington. But she does believe owners need to contribute to affordable housing in exchange for taking long-term housing out of the market.

An ‘unfair’ tax

The fight against allowing a short-term rental tax has been fierce — and expensive.

Last year, San Francisco-based vacation-rental giant Airbnb pumped $3.9 million into its affiliated political action committee against short-term rental taxes. Even though the PAC has spent just around half that amount, Airbnb recently announced an additional investment of $1.9 million.

Jordan Mitchell, Airbnb’s public policy manager, said in a statement Friday that a tax on short-term rentals would unfairly target residents who share their homes while giving hotel corporations a free pass.

“In reality, the tax would make it more expensive for Washington families who depend on short-term rentals for affordable travel, and residents who share their homes to afford to stay in their home,” Mitchell said.

In a committee hearing Tuesday, short-term rental owners from across the state decried the bill, saying it would cut back on their profits and turn people off from staying in short-term rentals.

Some argued that their short-term rentals are cheaper than hotels and preferred by families undergoing medical treatment in nearby hospitals.

Many owners said in the committee hearing that their short-term rentals support them in retirement. One out of five Washington Airbnb hosts are over the age of 60, according to Airbnb.

Gig Harbor resident Richard Moser, who owns a short-term duplex rental and is a member of a group representing short-term rental owners, said at the hearing that the bill threatens his ability to generate enough income to afford his living expenses in retirement.

“Please consider the fact that short-term rental operators have to live someplace too,” said Moser, 73.

Short-term rental owners already pay a lodging tax, which is capped at 12% when taken together with other taxes in most of the state. In Seattle, which already has a short-term rental tax of $14 per night for entire homes and $8 per night for rooms, the combined taxes cannot exceed 15.2%.

If HB 2559 passes, that would mean Washington short-term rental owners could pay as much as 16% in taxes everywhere except Seattle, where they’d pay as much as 19.2%.

Short-term rental owners said an additional tax, which would likely be passed on to guests, would cause more people to choose hotels over short-term rentals.

“I feel it is unfair to tax the Airbnbs and not tax the hotels at the same rate,” said short-term rental owner and Colville, Stevens County, resident Shelley Bacon. “They are more likely to be owned by people with more means.”

‘Losing community’

Advocates for a tax on short-term rentals say they should be targeted because they’re the only form of lodging that takes up long-term housing.

At Tuesday’s committee hearing, residents of Washington’s tourist destinations told legislators that they’ve watched affordable housing disappear in their communities.

Many residents were from Leavenworth — a Bavarian-themed town that welcomes millions of visitors a year but only has a few thousand permanent residents.

Leavenworth Mayor Carl Florea said the city has a severe shortage of affordable workforce housing, forcing workers to commute from elsewhere.

“Leavenworth is losing its community,” Florea said.

The city bans short-term rentals in residential areas, but they are common in commercial areas and just outside city limits. Florea said Leavenworth would work with Chelan County to pass taxes and create more housing for the city’s workers.

Some see a tax on short-term rentals as a way vacationers can give back to the community they’re visiting.

“There's a growing uneasiness among vacationers about their impact on local communities,” said Michele Thomas, director of Policy and Advocacy at the Washington Low Income Housing Alliance. “But knowing that your vacation is helping the people in the beautiful community that you're in that you're visiting is a win, win.”

Caitlin Sullivan, who owns a short-term rental home in Port Angeles, said she supports the bill because she understands that short-term rentals take up housing stock.

“Our tourism towns desperately need this as an option to help support the creation of housing for the very workers who support the tourism industries,” she said.

The state estimates Washington needs to create an estimated 1.1 million new homes by 2044. More than half of those homes need to be affordable.

“If we’re going to address our housing crisis, we need to find revenue streams,” Rep. Parshley said.

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