Legislation under consideration in Olympia aims to eliminate an existing Washington tax exemption for major mortgage lenders, redirecting the resulting revenue into the state’s wildfire preparedness and prevention efforts. The proposal, introduced as House Bill 2089, was prefiled on December 2, 2025, and first read in the House Finance Committee on January 12, 2026, according to the official legislative record accessible via Washington State Legislature’s bill information. ([lawfilesext.leg.wa.gov](https://lawfilesext.leg.wa.gov/biennium/2025-26/Htm/Bills/House%20Bills/2089.htm?utm_source=openai))

HB 2089 would modify RCW 82.04.29005, a section of state law governing business and occupation tax deductions for certain loan interest income. The legislature’s stated intent is to restore predictable funding for the state’s wildfire response, forest restoration, and community resilience account. Funding for that account had been cut by 50% at the start of the 2025–2027 budget cycle, leaving wildfire preparedness—an issue of increasing local concern in Southwest Washington—without a stable revenue stream. ([lawfilesext.leg.wa.gov](https://lawfilesext.leg.wa.gov/biennium/2025-26/Htm/Bills/House%20Bills/2089.htm?utm_source=openai))

The bill’s findings reference the state’s escalating wildfire costs and the long-term financial impacts of major fires, including infrastructure damage, reduced land and property values, and public health effects. The measure contends that investing in prevention and preparedness lowers overall long-term public expenditures. Local communities along the I‑5 corridor, including those in Cowlitz County, have been vocal about the growing frequency of smoke events and heightened fire risk, even if the most severe burns occur elsewhere in the state. HB 2089 frames its fiscal changes as part of a broader strategy to stabilize the wildfire response account created in 2021. ([lawfilesext.leg.wa.gov](https://lawfilesext.leg.wa.gov/biennium/2025-26/Htm/Bills/House%20Bills/2089.htm?utm_source=openai))

The tax exemption targeted by the bill was originally extended in 2012 to defined community banks, allowing them to deduct interest earned on certain loans from state business and occupation tax calculations. Supporters of the repeal argue that the exemption now disproportionately benefits large lenders rather than community banking institutions it was meant to support. Opponents are expected to raise questions about impacts on lending markets and downstream borrowing costs. ([lawfilesext.leg.wa.gov](https://lawfilesext.leg.wa.gov/biennium/2025-26/Htm/Bills/House%20Bills/2089.htm?utm_source=openai))

The bill continues to move through committee review. If enacted, the changes would create a new and ongoing revenue source dedicated in part to wildfire mitigation, with potential implications for how rural and suburban communities prepare for increasingly destructive fire seasons.