Seattle implements payroll expense tax
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Friday, September 18, 2020

Seattle implements payroll expense tax

By Payroll and Entitlements Editorial Staff

Seattle has established a payroll expense tax that will take effect January 1, 2021 and be in place through December 31, 2020. The tax will be imposed on any person engaging in business in Seattle, and the amount of the tax will vary based on the payroll expense of the business, subject to certain deductions as provided in the ordinance, an multiplied by the following rates:

  • For businesses with payroll expense up to $99,999,999.99, the rate will be: a. Seven-tenths percent of the payroll expense of employees with annual 6 compensation of $150,000 to $399,999.99; and b. One and seven-tenths percent of the payroll expense of employees with annual compensation of $400,000 or more.
  • For businesses with payroll expense of $100 million to $999,999,999.99, the rate will be: a. Seven-tenths percent of the payroll expense of employees with annual compensation of $150,000 to $399,999.99; and b. One and nine-tenths percent of the payroll expense of employees with annual compensation of $400,000 or more.
  • For businesses with payroll expense of $1 billion or greater, the rate will be: a. One and four-tenths percent of the payroll expense of employees with 17 annual compensation of $150,000 to $399,999.99; and b. Two and four-tenths percent of the payroll expense of employees with annual compensation of $400,000 or more.

The tax will be levied on businesses, which may not make any deductions from employees’ compensation to pay for the tax.

The tax will be due quarterly, except that the amount due for all of 2021 must be paid by January 31, 2022. (City of Seattle Ordinance No. 126108, September 4, 2020).

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