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Implicit Price Deflator

This page provides information on the implicit price deflator (IPD) and how it affects property tax rate setting for local governments in Washington State, as well as recent IPD data and sample resolutions/ordinances of "substantial need" if the IPD falls below 1%.

IPD Rate Exceeds 1% for Setting 2024 Property Taxes: The IPD inflation rate as of September 25, 2023 is 3.67%. This means all taxing districts with populations 10,000 or greater can take the full 1% levy increase in 2024 without adopting a resolution/ordinance of "substantial need." See the Department of Revenue's IPD memo to county assessors.

Taxing districts with less than 10,000 population take the full 1% levy increase every year regardless of the IPD inflation rate.


The implicit price deflator only impacts property taxes for local governments with a population of 10,000 or more. Local governments with a population of less than 10,000 are not affected, regardless of the inflation rate.

The implicit price deflator for personal consumption expenditures is a figure compiled by the federal Bureau of Economic Analysis (BEA) to measure inflation. A few local governments use the implicit price deflator as an inflation index for certain fees or benefits, although it is more common to use other indexes such as the Consumer Price Index. But the primary importance of the IPD to local governments in Washington State is that it can impact how much property tax revenue local governments with a population of 10,000 or more can collect in the upcoming year, as discussed on the remainder of this page.

Under state law, a local government may not increase its property tax levy more than 1% in a given year (the "101% limit factor"), plus additional levy amounts generated by new construction, property improvements, and other "add-ons" listed in RCW 84.55.010, as well as any changes due to new annexations (RCW 84.55.030 and WAC 458-19-035). Jurisdictions may only exceed the 101% limit factor if they have banked capacity available or if voters have approved a levy lid lift, as described on our page Levy Lid Lifts.

Local governments with a population of 10,000 or more are limited to an annual levy increase of 1% or the rate of inflation as measured by the IPD, whichever is less (RCW 84.55.005-.010). For instance, if the IPD rate of inflation increased 1.5% in the past year, the limit factor for next year's property taxes for those jurisdictions would be 101% (plus new construction and add-ons). But if the IPD was calculated at 0.5%, the limit factor for those jurisdictions would be 100.5%.

In rare instances, the implicit price deflator can even be negative. For instance, if the IPD was calculated at -0.5%, the limit factor for jurisdictions with a population of 10,000 or more would be 99.5% plus new construction and add-ons. (For more information on negative IPD, see the state Department of Revenue (DOR) webpage Impact of a negative implicit price deflator (IPD) on property tax levies.)

However, if the IPD falls below 1%, a jurisdiction with a population of 10,000 or more may still increase its levy amount up to the 101% levy limit (or bank the excess capacity) if it adopts a resolution or ordinance of "substantial need" as described below.

How is the IPD Calculated?

The definition of "inflation" for setting a property tax levy (RCW 84.55.005) is:

"Inflation" means the percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent twelve-month period by the bureau of economic analysis of the federal department of commerce by September 25th of the year before the taxes are payable.

DOR calculates the IPD using the most recent quarterly numbers reported by the federal Bureau of Economic Analysis (BEA) and distributes a memo to county assessors and other stakeholders confirming the rate on or shortly after September 25 each year.

Detailed Methodology

Near the end of every month, BEA publishes an estimate of the gross domestic product and IPD numbers from the previous calendar year quarter. For instance, every January BEA releases the first estimate, or "advance estimate," of the numbers for the preceding fourth quarter (October-December). In February, BEA releases a revised "second estimate" of the numbers for Q4, and in March BEA publishes the revised "third estimate" for Q4. In April, BEA publishes the advance estimate for Q1 (January-March), and so on.

These quarterly numbers are seasonally adjusted each year in July, and these seasonal numbers form the basis for the prior year IPD personal consumption expenditure number that is used by DOR to calculate inflation.

The most recent publication available on September 25 is typically the August publication, or the "second estimate" for Q2. This means that, for property tax purposes, the rate of change in the IPD is typically calculated by comparing the "second estimate" for Q2 to the revised Q2 data from the previous year.

Current IPD Data

To see the most recent IPD data, refer to the BEA National Income and Product Accounts (NIPA) Table 1.1.9: Implicit Price Deflators for Gross Domestic Product. See Line 2, Personal Consumption Expenditures.

Every September, we will publish the new IPD rate for property tax purposes at the top of this page. For historical IPD increases for property tax purposes, see the section at the bottom of this page.

Resolution or Ordinance of Substantial Need

If the IPD falls below one percent, local governments with a population of 10,000 or more may not increase their property tax levies above the rate of inflation (or bank the excess capacity) unless they adopt a resolution or ordinance of substantial need (RCW 84.55.0101).

This resolution or ordinance of substantial need is separate from the property tax levy ordinance, and separate resolutions/ordinances must be adopted for each individual levy. For instance, if the IPD falls below 1% and your county has a current expense levy, a road levy, and a conservation futures levy, and assuming the county wants to levy the full 1% increase for all three levies, the county would need to adopt three separate substantial need findings. Likewise, if a city or a fire district has a separate EMS levy on top of its regular/general fund levy, it would need to adopt findings of substantial need for both levies.

If the local legislative body has five or more members, the resolution must be approved by a "majority plus one" supermajority for passage. If the legislative body has four members or less, it must be approved by a simple majority. The statute does not require a separate public hearing for the finding of substantial need, but presumably the substantial need finding would be established during the public hearing on revenue sources and property tax increases required by RCW 84.55.120.

Practice Tip: There is no clear definition of "substantial need," and it depends on the needs and requirements of each individual jurisdiction. Each jurisdiction should document its evidence to support those needs in written findings that are included within the ordinance/resolution (such as a documented increase in the costs of services in excess of current inflation factors). See the examples below.

Local governments with a population under 10,000 may increase their property tax levies up to 1% regardless of the latest inflation data, so they do not need to adopt a resolution or ordinance of substantial need.

Examples of Substantial Need Resolutions/Ordinances

Below are examples of resolutions and ordinances of substantial need from a variety of local governments in Washington.

General Template

City Regular/General Fund Levies

  • Anacortes Resolution No. 1935 (2015) – Reasons cited include labor contracts, utility tax decrease, and depletion of general fund reserves
  • Covington Resolution No. 15-13 (2015) – Reasons cited include increased costs and declining and unstable revenues from utility taxes, REET, and other sources
  • Issaquah Resolution No. 2020-15 (2020) – Reasons cited include the fiscal impacts of the COVID-19 pandemic and increases in employee compensation costs
  • Kirkland Resolution No. R-5167 (2015) – Reasons cited include previously adopted budget assumptions, short-term and long-term revenue losses, and addition of new firefighter position
  • Lynden Resolution No. 933 (2015) – Reasons cited include 3% labor contract increases and increases in health care costs and retirement benefits

Counties - General Fund/Current Expense

Counties - Road District/Fund

Counties - Flood Control

Counties - Conservation Futures Fund

EMS Levies

Special Purpose Districts

Historical IPD Data

Below are the recent historical percentage changes in the implicit price deflator for personal consumption expenditures. Red indicates when the IPD fell below 1%, affecting the ability of local governments with a population of 10,000 or more to increase their property tax levies for the following year.

Please note that these percentages are the official calculations used for property tax levy setting, as declared by the Washington Department of Revenue on September 25 of each year. DOR never revises these figures, so these rates do not reflect any adjustments to the IPD that the federal Bureau of Economic Analysis may have made after the September 25 statutory deadline.

Also see the DOR IPD memos to county assessors.

Property Taxes Due In: % Change in IPD Limit Factor for Jurisdictions of 10,000+ Population
2024 3.67 101%
2023 6.457 101%
2022 3.860 101%
2021 0.602 100.602%
2020 1.396 101%
2019 2.169 101%
2018 1.553 101%
2017 0.953 100.953%
2016 0.251 100.251%
2015 1.591 101%

Last Modified: September 27, 2023