Seattle Payroll Expense Tax

The City of Seattle, Washington will impose a new employer-only Payroll Expense Tax effective 1 January 2021 (This is also known as JumpStart Seattle). The full amount due for 2021 must be paid by 1 /31/2022. This tax applies to businesses operating in Seattle (with some exceptions). It is applicable to employers with at least $7 million in annual payrolls and employees with annual compensation of at least $150,000

More detailed information is available here.

Setup

The agency will look back at the prior tax year to determine which employers are exempt/non exempt from this tax in 2021 and the tax rate is dependent on the current year’s employee compensation of at least $150,000.
Current year's total payroll expense of less than $100 million Current year's total payroll expense of $100 million or more, but less than $1 billion Current year's total payroll expense of $1 billion or greater
Total annual payroll expense for employees who have annual compensation of $150,000 to $399,999.99 in the current year Rate = 0.7% Rate = 0.7% Rate = 1.4%
Total annual payroll expense for employees who have annual compensation of $400,000 or more in the current year Rate = 1.7% Rate = 1.9% Rate = 2.4%

This tax is paid to the City of Seattle and will require that businesses have an account with this agency. You'll need to provide the following information in the Tax Settings of your Payroll app in Zenefits.
  • Frequency options (Quarterly or Annual)
  • Tax ID
  • Frequency
  • Calculation

This is an employer level tax calculation and there are no employee withholdings.
The tax rates are based on the amount of the business’ annual Seattle-based payroll expense and the amount of annual employee compensation of at least $150,000

If the current year’s total payroll expense is less than $100 million, 
  • Rate = 0.7% of total annual payroll expense for employees who have annual compensation of $150,000 to $399,999.99 in the current year 
  • Rate = 1.7% of total annual payroll expense for employees who have annual compensation of $400,000 or more in the current year 

If the current year’s total payroll expense is $100 million or more, but less than $1 billion,
  • Rate = 0.7% of total annual payroll expense for employees who have annual compensation of $150,000 to $399,999.99 in the current year 
  • Rate = 1.9% of total annual payroll expense for employees who have annual compensation of $400,000 or more in the current year 

If the current year’s total payroll expense is $1 billion or greater,
  • Rate = 1.4% of total annual payroll expense for employees who have annual compensation of $150,000 to $399,999.99 in the current year
  • Rate = 2.4% of total annual payroll expense for employees who have annual compensation of $400,000 or more in the current year

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