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Seattle’s JumpStart Tax | Overview, Charges, & Extra

When you’re an employer in Seattle, Washington, chances are you’ll have to know in regards to the JumpStart tax. The tax helps fund providers for Seattle’s low-income inhabitants. Learn on to study extra about Seattle’s JumpStart tax. 

What’s the Seattle JumpStart tax?

On July 6, 2020, Seattle’s metropolis council permitted a brand new payroll expense tax for sure companies working in Seattle. The JumpStart Seattle tax took impact on January 1, 2021 and at present has an finish date of December 31, 2040.

Once more, the JumpStart payroll expense tax offers providers to Seattle’s low-income inhabitants. The tax additionally helps replenish Seattle’s Emergency Administration Fund and Income Stabilization Fund (which was used up in response to COVID-19).

Who’s accountable for the Seattle payroll expense tax?

The Seattle JumpStart tax is an employer-funded tax. Employers can not make deductions from staff’ compensation for this tax.

Employers with greater than $8,135,746 in annual payroll bills are topic to the brand new Seattle payroll tax. Moreover, the quantity of the tax relies on the cumulative compensation of extremely paid staff making $174,337 or extra yearly.

So, which employers should pay the tax? That you must pay the tax on worker wages you probably have:

  1. Greater than $8,135,746 in annual payroll bills AND
  2. At the least one worker with annual compensation of $174,337 or extra

When you’ve got greater than $8,135,746 in annual payroll bills, pay the tax on every worker’s wages over $174,337.

Which employers must pay the Seattle JumpStart tax? If you have more than $8,135,746 in annual payroll expenses and have at least one employee with annual compensation of $174,337.

The 2023 payroll tax charges vary from 0.7% to 2.4% and are topic to vary yearly. The best tax solely applies to firms with $1,162,249,382 or extra in payroll bills and solely on worker earnings of $464,900 or extra.

Check out a breakdown of the brand new Seattle payroll tax:

Enterprise Annual Payroll bills Annual Worker Compensation Between $0 – $174,337 Annual Worker Compensation Between $174,337 – $464,900 Annual Worker Compensation of $464,900 or extra
Beneath $116,224,938 N/A 0.7% 1.7%
$116,224,938 – $1,162,249,382 N/A 0.7% 1.9%
$1,162,249,382 or extra N/A 1.4% 2.4%

Who’s exempt from the JumpStart Seattle tax?

There are a variety of companies exempt from this new tax. The next don’t have to pay into the JumpStart tax:

  • Companies with annual compensation of lower than $8,135,746 within the earlier 12 months
  • An unbiased contractor who performs providers for the needs of the Seattle enterprise license tax and whose compensation is included in payroll expense of one other enterprise topic to the JumpStart tax
  • Any enterprise engaged in enterprise in Seattle as a grocery enterprise
  • Companies which are preempted from taxation by cities pursuant to federal or state statutes or laws akin to:
    • Insurance coverage companies and their brokers as outlined by RCW 48.01.050 and RCW 48.17.010 and whose complete income is exempt from the Seattle enterprise license tax
    • Companies that solely promote, manufacture, or distribute motorized vehicle gasoline as outlined in RCW 82.38.020 and exempted below RCW 82.38.080
    • Companies that solely distribute or promote liquor as outlined in RCW 66.04.010 and exempted in RCW 66.08.120
    • Federal and state authorities businesses and any native governmental entity

Additionally, nonprofit healthcare organizations are exempt for compensation bills between $150,000 – $400,000 for the primary three years.

For extra details about whether or not it’s essential to pay the brand new tax, contact Seattle and evaluate the laws particulars.

When is the JumpStart payroll tax due?

Employers should pay the tax on a quarterly foundation. Nevertheless, some companies could also be eligible for an annual reporting interval as a substitute.

Calculating payroll taxes might be tough. With Patriot’s on-line payroll software program, you don’t have to fret about computing payroll taxes your self. And, we provide free, USA-based assist. Get your free trial right now!

This isn’t meant as authorized recommendation; for extra data, please click on right here.

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