News & Insights

New City of Seattle Payroll Tax

Tax Development Aug 03, 2020

New City of Seattle Payroll TaxOn July 6, 2020, the Seattle City Council passed a landmark payroll tax for businesses with payroll in the city. The tax, dubbed “JumpStart Seattle” by the Council and sponsored by Councilmember Teresa Mosqueda, was first unveiled in mid-June.

The Council bill imposes a tax on business payrolls of $7 million or more annually. The new tax has different rates depending on the level of Seattle sourced payroll and type of business.

The tax will be imposed as follows:

1. Seattle payroll from $7 million to $999,999,999.99:
      a. Individual employee compensation from $150,000 to $499,999.99: Rate at 0.7%
      b. Individual employee compensation at or above $500,000: Rate at 1.4%

2. Seattle Payroll at or above $1 billion:
      a. Individual employee compensation from $150,000 to $499,999.99: Rate at 1.4%
      b. Individual employee compensation at or above $500,000: Rate a 2.1%

Federal and state government entities, grocery stores, and businesses preempted from taxation by cities under federal or Washington state laws, and businesses with payrolls below the $7 million threshold, will be exempt. The new tax will be imposed starting January 1, 2021 and will be due on the return due in 2022.

TECHNICAL INFORMATION CONTACTS:

Landon Julius
Principal
Ryan
913.338.2005
landon.julius@ryan.com

Robert (Bob) Overstreet
Director
Ryan
213.627.1719
robert.overstreet@ryan.com

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