The Seattle JumpStart payroll tax is a tax on businesses with a total payroll of more than $8.1 million annually, and that have at least one employee making $174,337 per year or more. The tax rate is 1% for businesses with a payroll of up to $20 million, 2% for businesses with a payroll of $20 million to $50 million, and 3% for businesses with a payroll of more than $50 million.
The JumpStart tax was originally intended to be a temporary measure to help fund affordable housing and other city initiatives. However, the tax has been extended several times, and it is now scheduled to expire in 2027.
Tech industry slowing down
In recent months, the JumpStart tax has come under fire as the tech industry has slowed down. The tax applies to many tech companies, and the recent decline in tech company stock values has hurt JumpStart tax collections. In addition, many tech employees have continued to work from home post-pandemic, which means that some of their working hours are not subject to the tax.
As a result of these factors, the city of Seattle is now projecting that the JumpStart tax will bring in about $103 million less than expected between 2025 and 2027. This could have a significant impact on the city’s budget, and it is possible that the JumpStart tax could be extended or even made permanent.
Small business owners in Seattle
What does this mean for small business owners in Seattle? If your business is subject to the JumpStart tax, you should be aware that your tax liability could increase in the coming years. You should also be aware that the city may consider making changes to the tax, such as increasing the tax rate or expanding the number of businesses that are subject to the tax.
If you have any questions about the JumpStart tax, you should consult with your accountant or tax advisor.
Here are some additional things to keep in mind about the JumpStart tax:
- The tax is due quarterly.
- The tax is calculated based on the number of employees you have and their salaries.
- You can claim a credit against the JumpStart tax for the amount of state and local sales and use taxes you paid.