Seattle Passes New Payroll Tax Legislation

Seattle Passes New Payroll Tax Legislation

On Monday, Seattle City Council voted to approve the “JumpStart Seattle” payroll tax bill. The bill is expected to go into effect January 1, 2021, and raise an estimated $200 million. Initially, the revenue will be used for coronavirus relief efforts, but long term will address homelessness in Seattle.

Companies with more than $7 million in annual payroll will be charged a percentage on all employees with salaries of at least $150,000. For businesses with a payroll expense of up to $100 million, the tax rate is as follow:

–         0.7% of the payroll expense of employees with annual compensation of $150,000 to $399,999.99

–         1.7% of the payroll expense of employees with annual compensation of $400,000 or more

The original legislation did include an exemption for not for profit organizations, but the council did vote to exclude that exemption. The exemption was replaced with a very narrow exemption for  “Non-profit healthcare entity” which means (a) a non-profit entity engaged primarily in the provision of comprehensive healthcare services, including primary and specialty care, and other non-profit healthcare entities that provide at least 50 percent of their services to patients covered by Apple Health and TRICARE, and to patients who have no third-party payor; (b) a non-profit entity that conducts life sciences research and development; or (c) a predominately capitated provider group within an integrated delivery system operated by a fully non-profit carrier licensed under chapter 48.44 or 48.46 RCW.

LeadingAge will continue to engage with the city council, urging them to amend the exemption to cover a larger group of healthcare providers.

The payroll tax is set to sunset on December 31, 2040. Seattle City Council is expected to release a more detailed spending plan shortly, and we will continue to keep you updated as information is released. 




Alyssa Odegaard- Vice President, Public Policy 

p: 253.964.8870