2025 tax preference review: Disabled Veteran Adapted Housing
25-10 final report | December 2025
Geoff Cunningham, research analyst
Pete van Moorsel, tax review coordinator; Eric Thomas, legislative auditor
Legislative Auditor's conclusion
The preference provides limited financial relief because few eligible veterans claim it.
Key points
- The preference is available to disabled military veterans who receive an adapted housing grant from the federal Department of Veterans Affairs (VA).
- A veteran who uses a VA grant can receive a state sales tax refund of up to $2,500. The average grant-funded project likely includes about $3,700 in state sales tax.
- From 2017 through 2024, fewer than three beneficiaries claimed the preference. The combined total was 0.33% of the funds available.
- More people were eligible: during this time, the VA awarded 252 qualifying grants to Washingtonians.
- Veterans may be unaware of the preference. Two agencies post information on their websites but do not otherwise promote it to eligible veterans.
Legislative Auditor’s recommendations
The Legislative Auditor makes two recommendations.
Recommendation #1
The Legislature should continue the tax preference.
- It should extend the preference's January 1, 2028, expiration date. The preference can provide financial relief to disabled veterans who use their federal grant to pay state sales tax on the cost of adaptive housing projects.
Legislation required: Yes.
Fiscal impact: If the Legislature continues the preference, use of the preference is estimated to be $0 in the 2027-29 biennium.
Implementation date: 2027 legislative session.
Commission recommendation: Endorse without comment (HTML)
Recommendation #2
The Legislature should modify the tax preference.
- It should modify the preference to more effectively provide financial relief to eligible disabled veterans. One option is to increase the $2,500 per-project cap to cover a greater portion of state sales tax paid on adaptive housing projects.
- It should consult with the Washington Department of Veterans Affairs when considering changes to the preference. The WDVA aims to connect veterans and their family members to the benefits and services they earned through their military service.
Legislation required: Yes.
Fiscal impact: Depends on Legislature's policy choice. The preference is currently capped at $125,000 per year.
Implementation date: 2027 legislative session.
Commission recommendation: Endorse with comment (HTML)
Read the full report
Disabled Veteran Adapted Housing (HTML)