Bill > SB5796

This bill establishes a new payroll expense tax on large employers in Washington state beginning July 1, 2026. The tax will apply to employers with total annual payroll expenses exceeding $7 million and will be calculated at 5% on wages above the social security wage threshold. The legislation aims to generate revenue for the state's general fund to support public schools, healthcare, and social services, addressing what the bill describes as the state's second most regressive tax system in the nation. Employers cannot deduct this tax from employee wages, and the tax is specifically designed to impact only approximately 17% of businesses in the state. The bill includes detailed provisions for tax collection, including requirements for employers to report and remit taxes, penalties for non-compliance, and a process for appeals and judicial review. The revenue collected will be deposited directly into the state's general fund, with the intent of providing sustainable funding for essential public programs and services while reducing the tax burden on small and low-margin businesses.

Budget and Finance

https://app.leg.wa.gov/billsummary?BillNumber=5796&Year=2025&Initiative=false