Why Can't People Afford a Home in Washington State?

By Cindy Alia 3/26/25

If you have a home, you may not soon if the Washington State legislative majority party has their way.

If you do not yet own a home, the Washington State legislative majority party will make it much more difficult for you to save to have a home.

Proposed Taxes (March 26, 2025)

Washington State proposes $5B-$8B in new taxes:

  • Fuel: +6¢ (Senate) or +9¢ (House)/gallon, indexed; $250M-$300M/year.
  • House Bills: Capital gains (7%), wealth (0.8%), property cap (1% to 3%), B&O surcharge, fees; $3B-$5B/year.
  • Senate: 1% intangibles, payroll tax; $1.7B/year.

Inflation Drivers

  • Fuel tax adds 1.4-2.1% to gas ($4.19/gallon), 0.02-0.03% to CPI.
  • 2% indexing adds 0.01-0.02%/year.
  • Business costs raise goods prices (0.1-0.2% CPI).

Tax Burden

  • Current: 7.5% of $725B GDP ($54B total).
  • New: 8.3%-8.5% ($60.5B), nearing 9% with indexing.

Affordability

  • Adds $200-$500/year per household.
  • Median $80K earner’s savings drop from $6K to $5.5K; $120K down payment takes 21-22 years vs. 20.
  • Lower earners ($40K) lose 15-25% of $2K savings.
  • High home costs ($593K) get harder to reach.

Conclusion  New taxes raise Washington’s burden from 7.5% to 8.3%-8.5% of GDP, drive slight inflation (0.1-0.2%), and cut savings, stretching homeownership timelines by months to years


March 27, 2025