If you happen to’re an employer in Seattle, Washington, you could must know in regards to the JumpStart tax. The tax helps fund providers for Seattle’s low-income inhabitants. Learn on to be taught extra about Seattle’s JumpStart tax.
What’s the Seattle JumpStart tax?
On July 6, 2020, Seattle’s metropolis council authorized a brand new payroll expense tax for sure companies working in Seattle. The JumpStart Seattle tax took impact on January 1, 2021 and presently has an finish date of December 31, 2040.
Once more, the JumpStart payroll expense tax gives 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 chargeable for the Seattle payroll expense tax?
The Seattle JumpStart tax is an employer-funded tax. Employers can not make deductions from workers’ 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 workers making $174,337 or extra yearly.
So, which employers should pay the tax? You’ll want to pay the tax on worker wages when you’ve got:
- Greater than $8,135,746 in annual payroll bills AND
- A minimum of one worker with annual compensation of $174,337 or extra
You probably have greater than $8,135,746 in annual payroll bills, pay the tax on every worker’s wages over $174,337.
The 2023 payroll tax charges vary from 0.7% to 2.4% and are topic to alter yearly. The best tax solely applies to corporations 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|
|$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 selection of companies exempt from this new tax. The next would not have to pay into the JumpStart tax:
- Companies with annual compensation of lower than $8,135,746 within the earlier yr
- 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 can be preempted from taxation by cities pursuant to federal or state statutes or rules corresponding 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 gas as outlined in RCW 82.38.020 and exempted underneath 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 you have to pay the brand new tax, contact Seattle and assessment the laws particulars.
When is the JumpStart payroll tax due?
Employers should pay the tax on a quarterly foundation. Nonetheless, some companies could also be eligible for an annual reporting interval as an alternative.
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