In a special election held in February, voters in Seattle, Washington, approved a new payroll tax [City of Seattle, Proposition 1A]. The Seattle Social Housing Tax is effective retroactive to January 1, 2025. It is an employer-paid tax. The tax will be used to expand access to affordable housing in Seattle.
Tax Rate, Payment Schedule
The Seattle Social Housing Tax is 5% on compensation that exceeds $1 million paid in Seattle to an employee. The tax is paid by employers and cannot be deducted from employee compensation. For tax year 2025, Seattle employers subject to the tax will file returns and pay taxes due by January 31, 2026. For tax year 2026 and beyond, employers will file returns and pay taxes due on a quarterly basis.
Existing Seattle Payroll Expense Tax
Employers engaging in business in Seattle are also subject to a payroll expense tax. This is an employer-paid tax on the “payroll expense” of the business, meaning the compensation paid in Seattle to employees.
Interested in more state and local payroll coverage? PayrollOrg’s PayState Update eNewsletter is perfect for you.
Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for PayrollOrg.
