WA SB5796

Imposes a 5% payroll expense tax on large employers beginning July 1, 2026, applied to employee wages exceeding the Social Security wage threshold (currently $168,600 in 2024)

Exempts employers with total annual payroll of $7,000,000 or less, estimated to affect only 17% of businesses in the state

Employers may claim a credit for eligible city payroll expense taxes paid (based on rates in effect as of January 1, 2024), preventing double taxation

Revenue deposited into the state general fund to support public schools, health care, behavioral health services, and social services including developmental disability support and long-term care

Administered by the Employment Security Department with penalties for willful non-compliance ranging from $75-$250 for reporting failures, plus 1% monthly interest on delinquent taxes