Washington Payroll Tax Guide (2026)
Washington is the most involved payroll state in this group even without an income tax, because the 78,200 dollar unemployment wage base, a Paid Leave premium that rose to 1.13% on wages up to $184,500, an uncapped 0.58% WA Cares deduction and eight separate local minimum wages all have to be tracked at once.[5]
Washington payroll at a glance
Washington has no income tax withholding but four other state payroll items: unemployment insurance and the Employment Administration Fund paid by employers, Paid Family and Medical Leave split between both sides, and the WA Cares Fund taken only from employees.[5]
What changed for Washington payroll in 2026
Six items moved for Washington employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.
2026 Washington payroll tax calculator
Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.
Employer pays
Withheld from the employee
Washington does not withhold state income tax from wages, so there is nothing to add here.
Payroll tax rates & the nexus question
Washington runs five state payroll taxes. The table below is the whole state layer for 2026.[5]
The state payroll taxes
| Tax | Paid by | 2026 rate | Wage base |
|---|---|---|---|
| UI | Employer | 0.27%–6.02%; 115% of the average rate for the employer’s industry, with a federal minimum of 1.00% new | $78,200 |
| Paid Family and Medical Leave, employer share | Employer | 28.57% of the 1.13% total premium | $184,500 |
| Employment Administration Fund | Employer | 0.03% | $78,200 |
| Paid Family and Medical Leave, employee share | Employee | 71.43% of the 1.13% total premium | $184,500 |
| WA Cares Fund | Employee | 0.58% | none |
For 2026 the Employment Security Department places employers in one of 40 rate classes by benefit ratio. The experience rate runs from 0.00% in class 1 to 5.40% in class 40, the graduated social cost tax runs from 0.24 to 0.72%, and the Employment Administration Fund adds 0.03%. Total 2026 rates run from 0.27 to 6.02%. Experience plus social tax cannot exceed 6%, and the flat social tax is capped at 1.22%.[5]
Who has to register
An employer with employees performing services in Washington owes unemployment tax on their wages. Register for a state business licence with the Department of Revenue first, or update an existing licence when you hire your first employee, then file through ESD.[5]
Multistate and remote employees
When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.
- 1. Localisation of service→
- 2. Base of operations→
- 3. Place of direction & control→
- 4. Employee’s residence
One remote employee is usually enough. A single person working from home in Washington generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.
Confused by Washington’s payroll withholding & filing rules?
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Ask a Payroll SpecialistRegistration & return filing
Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.[5]
How to register
- Cross the wage threshold→
- Employer Account Management System, reached through Secure Access Washington→
- Receive account number→
- Annual tax rate notice, sent each December and effective for the whole following calendar year→
- File & deposit online
An employer with employees performing services in Washington owes unemployment tax on their wages. Register for a state business licence with the Department of Revenue first, or update an existing licence when you hire your first employee, then file through ESD.[5]
Returns, reports & due dates
| Form | What it is | Due |
|---|---|---|
| Quarterly tax and wage report filed in EAMS, plus a separate combined quarterly report for Paid Leave and WA Cares | Quarterly unemployment return | April 30, July 31, October 31, January 31 |
| Form 941 | Federal quarterly return | Last day of the month after quarter end |
| Form 940 | Federal unemployment, annual | January 31 |
| New hire report | Report of newly hired employees | Within 20 days of start date |
Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.[5]
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Subject wages vs. exempt payments
Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.[5]
Subject wages
- Salaries, hourly pay, overtime and piece rates
- Commissions, bonuses and incentive pay
- Most cash tips reported by the employee
- Vacation, holiday and paid sick leave when taken as wages
- Severance and payments in lieu of notice
- The cash value of meals and lodging provided as compensation
- Employer contributions to a non-qualified deferred compensation plan
- Wages subject to the employee-paid contributions listed above
Not subject
- Reimbursements of genuine business expenses under an accountable plan
- Employer contributions to a qualified retirement plan
- Employer-paid premiums for accident and health insurance
- Most third-party sick pay after the sixth calendar month
- Payments to a genuine independent contractor
- Workers compensation benefits
The wage base is per employer, per year, not per job. If you hire someone in August who already earned $78,200 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.
Glossary of key terms
- Taxable wage base
- The slice of each employee’s annual pay that unemployment tax is calculated on. In Washington that is $78,200 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
- Paid Family and Medical Leave, employee share
- An employee-funded contribution withheld from pay at 71.43% of the 1.13% total premium. It is the employee’s money, so it is withheld rather than paid by the employer, but the employer is responsible for remitting it.
- Experience rating
- The method Washington State Employment Security Department uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
- New employer rate
- The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
- Reserve account
- The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
- Successor employer
- A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
- Localisation of service
- The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
- FUTA credit reduction
- A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
- Supplemental wages
- Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
- Local withholding
- Income or occupational tax levied by a city, county or school district and withheld by the employer alongside state tax. It is assessed separately from the state layer.
Washington payroll tax, layer by layer
Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.
Layer 1: Federal
| Tax | Rate | 2026 base |
|---|---|---|
| Social Security | 6.2% each side | $184,500 |
| Medicare | 1.45% each side | No limit |
| Additional Medicare | 0.9% employee only | Over $200,000 |
| FUTA, standard | 0.6% net | $7,000 |
| Federal income tax | Per Form W-4 | No limit |
Washington has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.[14]
Layer 2: State
| Tax | Rate | 2026 base |
|---|---|---|
| UI, new employer | 115% of the average rate for the employer’s industry, with a federal minimum of 1.00% | $78,200 |
| UI, experienced | 0.27%–6.02% | $78,200 |
| Paid Family and Medical Leave, employer share | 28.57% of the 1.13% total premium | $184,500 |
| Employment Administration Fund | 0.03% | $78,200 |
| Paid Family and Medical Leave, employee share, employee | 71.43% of the 1.13% total premium | $184,500 |
| WA Cares Fund, employee | 0.58% | No limit |
| Income tax | None on wages | n/a |
Layer 3, county & city: a real third layer
No Washington city taxes wages in the withholding sense, but Seattle levies a payroll expense tax on larger employers. For 2026 a business is subject if it had $9,074,409 or more of Seattle payroll expense in 2025 and has at least one employee paid $194,452 or more in 2026. Rates run from 0.746 to 2.557% depending on payroll size and compensation band, returns are quarterly starting 30 April 2026, and the law specifically bars employers from withholding the tax from their employees.[11]
The state minimum wage is $17.13 an hour, effective 2026-01-01. The tipped cash wage is $17.13. 8 local jurisdictions set a higher floor. The highest is Tukwila at $21.65. Washington allows no tip credit, so tipped staff get the full hourly rate in cash and keep tips on top. Eight jurisdictions sit above the state floor in 2026: Tukwila 21.65, Burien 21.63 for employers with 500 or more employees, Renton 21.57 for employers with 500 or more, Seattle 21.30 at every employer size, King County unincorporated areas 20.82 at 500 or more, Everett 20.77 at 500 or more, Bellingham 19.13 and SeaTac 20.74 for hospitality and transportation employers. Smaller employer tiers apply in Burien, Renton, Everett and unincorporated King County. Two mid-year steps already took effect on 1 July 2026: Everett employers with 15 to 499 employees moved from 18.77 to $19.77, and Renton employers with 15 to 500 employees moved from 20.57 to $21.57. The state rate is adjusted for inflation each 30 September for the following 1 January.[1]
Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $80,168 a year ($1,541.70 a week) state rule, Washington L&I overtime rules, and only if the duties test is also met. Paying a salary is not by itself enough.[4]
Washington payroll FAQs
No. Washington has no personal income tax, so there is no state withholding and no state W-4. What you do withhold from a Washington paycheck is the employee share of Paid Family and Medical Leave and the WA Cares Fund contribution, on top of federal income tax, Social Security and Medicare.
Employers pay 28.57% of the total premium and employees pay 71.43%, on gross wages up to the 184,500 dollar Social Security cap. An employer that had fewer than 50 employees during calendar year 2025 does not owe the employer portion at all, but still has to collect and remit the employee portion or choose to cover it. Once an employee reaches the cap you stop collecting but keep reporting their wages.
No. WA Cares takes 0.58% of all gross wages with no cap, which is the main way it differs from Paid Leave. Employers owe no share of it, although you may elect to pay some or all of it for your staff. Workers with an approved exemption, federal employees and self-employed people who have not opted in do not contribute.
For 2026 the threshold is $1,541.70 a week, or 80,168.40 a year, which is 2.25 times the state minimum wage for a 40 hour week. That multiplier now applies to every employer size after small employers moved up from 2.0 on 1 January 2026. Because it far exceeds the federal $684 a week, the state figure is the one to use.
A new employer pays 115% of the average rate for all businesses in its industry, subject to a federal minimum of 1%, on the first $78,200 of each employee’s wages. You stay on that basis until you have been in business roughly two and a half to three years, at which point you are experience rated into one of 40 rate classes. Total 2026 rates run from 0.27 to 6.02%.
Eight jurisdictions sit above the 17.13 dollar state floor in 2026: Tukwila, Burien, Renton, Seattle, unincorporated King County, Everett, SeaTac and Bellingham. Tukwila is the highest at $21.65 and Seattle applies $21.30 at every employer size. Several of those cities scale the rate by employer size, and Everett and Renton raised their mid-size tiers on 1 July 2026, so check the tier as well as the city.
$78,200 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.
$17.13 an hour. 8 local jurisdictions set a higher rate, so check the rate for the location where the employee actually works. The tipped cash wage is $17.13.
April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.
Sources & methodology
- Washington State Department of Labor and Industries – Minimum Wage
- Washington State Department of Labor and Industries – Local Minimum Wage Rates
- Washington State Department of Labor and Industries – Changes to Overtime Rules
- Washington State Department of Labor and Industries – Salary Threshold Implementation Schedule, F700-207-000
- Washington State Employment Security Department – How We Determine Tax Rates
- Washington State Employment Security Department – 2026 Unemployment Tax Rates for Employers
- Washington State Employment Security Department – How to File Your Quarterly Tax and Wage Reports
- Washington State Employment Security Department – Employer’s Guide to Paying Taxes
- Washington State Paid Family and Medical Leave – Paid Leave Updates to Know in 2026
- WA Cares Fund, Washington State Employment Security Department – WA Cares Fund for Employers
- City of Seattle, Department of Finance and Administrative Services – Payroll Expense Tax
- Seattle Office of Labor Standards – Minimum Wage Ordinance
- U.S. Department of Labor, Employment and Training Administration – Significant Provisions of State Unemployment Insurance Laws, January 2026
- U.S. Department of Labor, Employment and Training Administration – FUTA Credit Reductions
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