JLARC preliminary tax-preference reviews: staff recommend continuing several credits, allow one to expire
July 15, 2026 | Legislative Sessions, Washington
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JLARC staff on July 15 presented preliminary reviews of seven tax preferences and proposed recommendations to the committee.
Main Street communities: JLARC found the Main Street B&O and public-utility tax credit increased donations to local Main Street organizations and is associated with business growth near designated downtown cores. Staff recommended continuing the preference beyond its January 2032 expiry and asked the Department of Archaeology and Historic Preservation to collect more consistent annual business-count data within Main Street boundaries.
Equitable Access to Credit: The B&O tax credit, created in 2022 to incentivize contributions to CDFIs that lend in underserved communities, funded about $1.2M in business loans in 2024. JLARC recommended continuing the preference beyond its July 2027 expiration, noting the program appears to meet its goal though data are limited.
Urban data centers: JLARC found fewer than 10 beneficiaries used the urban sales-and-use tax exemption between 2022 and 2025 and all projects were refurbishments, not new construction. The legislative auditor recommended allowing the original exemption to expire because it did not spur new construction; the statute was narrowed in 2026 to limit future use to new construction.
Other reviews: JLARC recommended continuing the exemption for large private airplane modifications (which the report finds likely supports jobs and state tax revenue), continuing a biogas equipment exemption (but requiring improved reporting on usage and renewable natural gas production), and continuing the veterans' adaptive automotive equipment exemption despite declining federal VA grant use. A real-estate excise tax exemption for transfers to qualified nonprofits to house adults with developmental disabilities has not been used; JLARC recommended allowing it to expire as written and suggested DSHS and the legislature consider alternative strategies if the policy goal remains a priority.
Next steps: JLARC will produce proposed final reports and will present final recommendations in December 2026 with opportunities for public comment and agency responses.
Main Street communities: JLARC found the Main Street B&O and public-utility tax credit increased donations to local Main Street organizations and is associated with business growth near designated downtown cores. Staff recommended continuing the preference beyond its January 2032 expiry and asked the Department of Archaeology and Historic Preservation to collect more consistent annual business-count data within Main Street boundaries.
Equitable Access to Credit: The B&O tax credit, created in 2022 to incentivize contributions to CDFIs that lend in underserved communities, funded about $1.2M in business loans in 2024. JLARC recommended continuing the preference beyond its July 2027 expiration, noting the program appears to meet its goal though data are limited.
Urban data centers: JLARC found fewer than 10 beneficiaries used the urban sales-and-use tax exemption between 2022 and 2025 and all projects were refurbishments, not new construction. The legislative auditor recommended allowing the original exemption to expire because it did not spur new construction; the statute was narrowed in 2026 to limit future use to new construction.
Other reviews: JLARC recommended continuing the exemption for large private airplane modifications (which the report finds likely supports jobs and state tax revenue), continuing a biogas equipment exemption (but requiring improved reporting on usage and renewable natural gas production), and continuing the veterans' adaptive automotive equipment exemption despite declining federal VA grant use. A real-estate excise tax exemption for transfers to qualified nonprofits to house adults with developmental disabilities has not been used; JLARC recommended allowing it to expire as written and suggested DSHS and the legislature consider alternative strategies if the policy goal remains a priority.
Next steps: JLARC will produce proposed final reports and will present final recommendations in December 2026 with opportunities for public comment and agency responses.
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