Terrace Heights is a census-designated place in Yakima County, Washington, United States. The population was 9,244 at the 2020 census. It is essentially a suburb of the city of Yakima. According to the United States Census Bureau, the CDP has a total area of 8.2 square miles, of which, 7.9 square miles of it is land and 0.3 square miles of it is water.