Payroll Tax in Washington: Complete Guide 2026
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Payroll Tax in Washington: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Washington State levies no individual income tax, but employers and employees face a layered set of payroll obligations that can rival or exceed those in income-tax states. The state mandates contributions to the Paid Family and Medical Leave (PFML) program, the WA Cares Fund for long-term care, and Labor & Industries (L&I) workers’ compensation premiums, on top of the standard State Unemployment Insurance (SUI). Together, these programs create a payroll environment that demands careful attention from every Washington employer.
Washington Payroll Tax Rates (2026)
| Tax | Rate | Paid By | Wage Base |
|---|---|---|---|
| State Income Tax Withholding | None | N/A | N/A |
| State Unemployment Insurance (SUI) | ~0.27% to ~6.02% | Employer | First ~$68,500 per employee |
| Paid Family & Medical Leave (PFML) | ~0.74% total | Employer (~27%) + Employee (~73%) | Social Security wage base (~$168,600) |
| WA Cares Fund (Long-Term Care) | ~0.58% | Employee | All wages (no cap) |
| L&I Workers’ Compensation | Varies by industry | Employer + Employee | Varies by classification |
| Federal FICA — Social Security | ~6.2% each | Employer + Employee | First ~$168,600 |
| Federal FICA — Medicare | ~1.45% each | Employer + Employee | No cap |
| Additional Medicare (high earners) | ~0.9% | Employee only | Wages over ~$200,000 |
Washington’s SUI taxable wage base of approximately $68,500 ranks among the highest in the country, placing materially higher per-employee costs on employers compared to states like California ($7,000) or Texas (~$9,000).
How Washington Payroll Tax Works
State Unemployment Insurance (SUI)
Employers pay SUI on the first approximately ~$68,500 of each employee’s annual wages. New employers receive an industry-average rate for their first few years, typically between ~1.0% and ~2.5%. After the employer develops sufficient claims history, rates adjust based on the benefit ratio and social cost factor, with the full range spanning from approximately ~0.27% to ~6.02%. The high wage base means rate management is critical: an employer at ~1.5% pays approximately ~$1,028 per employee, compared to roughly ~$105 per employee on a ~$7,000 base.
Paid Family and Medical Leave (PFML)
Washington’s PFML program, administered by the Employment Security Department, provides up to ~12 weeks of paid medical leave and up to ~12 weeks of paid family leave, with a combined annual maximum of ~16 weeks. The total premium rate is projected at approximately 0.74% of wages up to the Social Security wage base ($168,600). Employers with ~50 or more employees pay approximately ~27% of the premium (roughly ~0.20%), while employees fund the remaining ~73% (roughly ~0.54%). Employers with fewer than ~50 employees are not required to pay the employer share but must still withhold and remit the employee portion.
WA Cares Fund
The WA Cares Fund is a first-in-the-nation long-term care insurance program funded by employee payroll contributions of approximately ~0.58% of all wages with no wage cap. The program provides a lifetime benefit of up to approximately ~$36,500 for qualified long-term care services. Employees who purchased qualifying private long-term care insurance before November ~1, ~2021, may apply for an exemption. New exemption windows for workers who meet certain criteria (such as veterans and non-immigrants on temporary visas) were added in subsequent legislative sessions.
Labor & Industries (L&I) Workers’ Compensation
Washington requires employers to carry workers’ compensation insurance through the state-run L&I system (self-insurance is available for qualifying employers). Premiums vary by risk classification and are split between employer and employee. Rates range from approximately ~$0.10 to over ~$3.00 per hours-worked depending on industry. Construction, logging, and manufacturing classifications carry the highest rates.
No State Income Tax
Washington does not tax wages, salaries, or other earned income. However, a ~7% capital gains tax applies to gains exceeding approximately ~$270,000. Employers do not withhold state income tax, which simplifies one dimension of payroll while the PFML, WA Cares, and L&I obligations add others.
Comparison to Neighboring States
| Metric | Washington | Oregon | Idaho | National Avg. |
|---|---|---|---|---|
| SUI taxable wage base | ~$68,500 | ~$52,800 | ~$53,500 | ~$16,000 |
| SUI rate range | ~0.27%—~6.02% | ~0.7%—~5.4% | ~0.21%—~5.4% | Varies |
| PFML/disability premium | ~0.74% (shared) | ~1.0% (shared) | None | ~0.4% |
| WA Cares / LTC premium | ~0.58% (employee) | None | None | N/A |
| Est. total employer cost per ~$50K employee | ~$4,500 | ~$4,700 | ~$3,800 | ~$4,300 |
Washington’s layered payroll programs push total employer costs slightly above the national average despite the absence of a state income tax.
Tips for Minimizing Payroll Tax Burden
- Manage SUI experience ratings aggressively. With a ~$68,500 wage base, each tenth of a percent in rate reduction translates to roughly ~$69 per employee. Contest improper unemployment claims and invest in retention.
- Track PFML employer-size thresholds. Employers with fewer than ~50 employees are exempt from the employer share of PFML premiums, saving approximately ~0.20% of covered payroll.
- Audit WA Cares exemptions. Confirm that employees with valid exemption letters are not being withheld, and ensure newly eligible employees are properly enrolled.
- Review L&I risk classifications annually. Misclassification can cause significant over- or under-payment. Request a rate review if your operations have changed.
- File quarterly reports on time. Late PFML and SUI filings trigger penalties of approximately ~$25 or more per quarter.
- Use the Employer Account Management Services (EAMS) portal. Electronic filing reduces errors and provides real-time account status for SUI and PFML.
- Budget for annual wage base adjustments. Washington adjusts its SUI wage base each year based on statewide average wages, so plan for incremental increases.
Key Takeaways
- Washington has no state income tax but imposes PFML premiums (~0.74% shared), WA Cares contributions (~0.58% employee-only), and L&I workers’ compensation on payroll
- The SUI taxable wage base of approximately ~$68,500 is among the highest in the nation, increasing per-employee unemployment costs significantly
- The WA Cares Fund provides up to approximately ~$36,500 in lifetime long-term care benefits funded entirely by employee payroll deductions
- Employers with fewer than ~50 employees are exempt from the employer share of PFML premiums
- L&I workers’ compensation premiums vary widely by industry classification and are shared between employer and employee
- Estimated total employer cost per ~$50,000 employee is approximately ~$4,500, slightly above the national average
Next Steps
- See the full state picture at Taxes in Washington: State Tax Guide 2026
- Learn about federal payroll obligations in the Self-Employment Tax Guide
- Compare state tax burdens at State Income Tax Rates Comparison 2026
- Calculate your federal bracket with the Tax Bracket Calculator 2026
- Get local help: Find a CPA Near You