Overview: 2026 Tax Preference Performance Reviews
July 2026
Vivien Chen, Geoff Cunningham, Aline Meysonnat, Eric Whitaker, research analysts
Pete van Moorsel, tax review coordinator; Eric Thomas, legislative auditor
Contact information
Reviews required by law
State law requires Joint Legislative Audit and Review Committee (JLARC) staff to review tax preferences. The Citizen Commission for Performance Measurement of Tax Preferences chooses the preferences for review each year.
Key points
- JLARC staff reviewed seven tax preferences this year.
- Four preferences aim to encourage economic development. Two support human services programs, and one addresses environmental issues.
- The Legislature specified goals and performance metrics for each preference. These goals and metrics guide the evaluation and legislative auditor recommendations.
- Each will expire without legislative action.
- The legislative auditor recommends that the Legislature continue five preferences and allow two to expire.
Recommendations
By law, we evaluate whether each preference achieves the Legislature's goals, who benefits, how much they save, and other factors. State law requires the legislative auditor to recommend legislative action for each tax preference.
Recommendation: Continue past expiration (5 preferences)
Five preferences have met the Legislature’s goals and/or the criteria for extension. The legislative auditor recommends that the Legislature continue them past their expiration dates.
Neighborhood Revitalization through the Main Street Program
Overall, the number of businesses in Main Street communities has increased. There is variation between Main Street communities.
Equitable Access to Credit Program
Based on one year of data, the preference appears to encourage investment in communities historically underserved by credit and to create or retain jobs.
Large Private Airplanes Owned by Nonresidents
Large airplane modification work performed in Washington likely supports up to $5.7 million in state tax revenue per year, resulting in a net positive impact. If the preference were allowed to expire, the modification activity may cease.
The preference continues to provide financial relief to injured veterans and removes a perceived competitive disadvantage, as intended.
Biogas Equipment Used in Landfills
Two landfills started processing biogas after the preference passed. Today, five landfills perform such work. The Legislature should also modify the preference to require beneficiaries to provide more detailed reporting about the use of the preference and production of renewable natural gas.
Recommendation: Allow to expire (2 preferences)
Data Centers in Urban Counties
Use of the preference has been limited to a few qualifying businesses and qualifying tenants since 2022. It has been used only for refurbishment projects. No new data centers were built with this preference.
The 2026 Legislature narrowed the preference to apply only to new construction. By eliminating refurbishments and removing replacement server equipment, it is increasingly unlikely that new construction will occur under the preference.
Housing for People with Developmental Disabilities
The Legislature specified that it would extend the preference if it led to an increase in residential property transfers. The preference has not been used.
The 2018 Legislature aimed to encourage parents to transfer property so their adult dependents with developmental disabilities could remain in their homes. If that continues to be a legislative priority, the Legislature should work with the Department of Social and Health Services to identify strategies to achieve that objective.
Video summary
Read the reports: Economic development
- Main Street program
- Data centers in urban counties
- Equitable access to credit
- Airplane modifications
Read the reports: Human services
Read the report: Environment
Legislative mandate and study scope
Learn more about tax reviews