Starting this month, Seattle’s payroll tax will be collected quarterly. Payments for the first quarter of 2022 are due on April 30. Seattle’s Department of Finance and Administrative Services (FAS) advises taxpayers to use the prior year (2021) to estimate reporting and payments for the first three quarters of the year and “true up” on the fourth quarter payment. Employers can file a tax return online here or manually by downloading the form here and providing a written check, postmarked by April 30. Employers still have the option to use one of two methods to calculate tax liability: the primarily assigned method or the hours method. However, employers must continue to use the same method selected on the first quarter payment for all 2022 payments.
In addition to changing from annual to quarterly payments, the payroll expense tax is adjusted for inflation, which impacts who is subject to the tax as well as the graduated tax rates. Businesses and non-profits are subject to the tax if they had a Seattle payroll of $7,386,494 or more in 2021. Employers are responsible for paying the payroll tax on salaries of $158,282 or more. The new tax rates are as follows:
For businesses with a Seattle payroll of $7,386,494 to $105,521,339:
- No tax for employees earning less than $158,282
- .7% for employees earning between $158,282 and $422,084
- 1.7% for employees earning more than $422,085
For businesses with a Seattle payroll of $105,521,339 to $1,055,213,392:
- No tax for employees earning less than $158,282
- .7% for employees earning between $158,282 and $422,084
- 1.9% for employees earning more than $422,085
For businesses with a Seattle payroll of more than $1,055,213,392:
- No tax for employees earning less than $158,282
- 1.4% for employees earning between $158,282 and $422,084
- 2.4% for employees earning more than $422,085
FAS is offering a training on the payroll tax this Wednesday, April 13 at 10 a.m. where the city will provide an overview of the tax and then take attendees’ questions. You can register here. You can read an overview of information about the payroll tax and review the latest training PowerPoint presentation here. If you have questions, you can email: tax@seattle.gov.
