Washington employer payroll taxes in 2026 (unemployment, PFML, WA Cares and workers’ comp)
Most Washington employers pay unemployment insurance tax to the Employment Security Department (ESD), pay or collect Paid Family and Medical Leave (PFML) premiums, collect the employee-paid WA Cares premium and generally insure workers’ compensation through the Department of Labor and Industries (L&I) or self-insurance. The Department of Revenue (DOR) says Washington does not currently have an individual income tax, and a 9.9 percent tax begins January 1, 2028 for individuals and joint filers with adjusted gross income over $1 million.
Washington employer payroll obligations at a glance
As of November 2026, the main Washington employer obligations compare as follows.
Obligation
Who pays
2026 figure
2027 status
Unemployment insurance (ESD)
The employer
$78,200 taxable wage base; total rate of 0.24 to 6.00 percent for a qualified employer
$82,000 taxable wage base published
Paid Family and Medical Leave (Paid Leave)
Employee share up to 71.43 percent; employer share about 28.57 percent, mandatory at 50 or more employees
1.13 percent of gross wages, not including tips, up to $184,500
1.2 percent, employers 29.3 percent and employees 70.7 percent
WA Cares
The employee pays; the employer collects
0.58 percent of gross wages with no Social Security cap
By law the rate cannot exceed 0.58 percent
Workers’ compensation (L&I)
The employer pays the Accident Fund premium and shares the other three premium parts equally with workers
For most risk classifications, a rate per hour worked
A 4.9 percent average hourly increase is proposed
Individual income tax (DOR)
Individuals and joint filers with adjusted gross income over $1 million, from 2028
Washington does not currently have an individual income tax
A 9.9 percent tax begins January 1, 2028
Seattle payroll expense tax
The employer; the law bars withholding it from employees
Required at $9,074,409 or more of 2025 Seattle payroll expense and 2026 compensation of $194,452 or more to at least one Seattle employee
Thresholds may increase each year
Which payroll taxes and premiums does a Washington employer pay or collect?
A Washington employer generally deals with four state programs: unemployment insurance with ESD, Paid Family and Medical Leave (called Paid Leave on the program’s own pages), WA Cares through the Paid Leave employer account, and workers’ compensation with L&I. Most Washington employers pay unemployment taxes on employee wages, and some employer types may choose to repay ESD for benefits paid instead.
The federal unemployment tax (FUTA) applies on top of the state programs. For 2026 the FUTA tax rate is 6.0 percent on the first $7,000 paid to each employee; an employer that pays state unemployment tax in full, on time and on the same wages can take a credit of up to 5.4 percent, which leaves 0.6 percent; the state wage base may be different. Which states are FUTA credit reduction states for 2026 is not final until after November 10, 2026, when the Department of Labor announces them, so check Schedule A (Form 940) and DOL’s FUTA credit reductions page after that date.
How do I register as an employer in Washington?
A business that will have employees in Washington applies for a business license through the Department of Revenue’s Business Licensing Service, and DOR says that application registers the business for workers’ compensation with L&I and for unemployment insurance with ESD; Paid Family and Medical Leave and WA Cares reporting run through a separate Paid Leave employer account that uses the business’s Unified Business Identifier (UBI) number.
DOR says the business must be registered before it hires, and that the Business License Application should be filed no sooner than 90 days before the planned hire date. The UBI number is a nine-digit number assigned when the license is issued. As of November 2026, DOR says online applications take about 10 business days, city or state endorsements can add 2 to 3 weeks and mailed applications can take up to six weeks.
What is the Washington unemployment insurance taxable wage base?
For 2026 the Washington unemployment insurance taxable wage base is $78,200, and ESD has published $82,000 for 2027.
The taxable wage base is the maximum wages per employee on which an employer pays Washington unemployment tax, and wages above it are “excess wages” that the employer reports but does not pay tax on. As of November 2026, ESD’s rate page lists $78,200 for 2026, and ESD’s June 10, 2026 news release says the 2027 base comes from the 2025 average annual wage.
What unemployment insurance rate does a new Washington employer pay?
Washington has no single new-employer unemployment rate, because ESD assigns the rate by the employer’s industry. For 2026 ESD assigns a new employer 115 percent of the average rate for all businesses in its industry, with a federal minimum rate of 1 percent, and stops treating an employer as new after 2 1/2 to 3 years in business.
How does Washington set my unemployment insurance rate after the new-employer period?
After the new-employer period, ESD places an employer in one of 40 rate classes by its benefit ratio, which is the benefits charged to the employer’s account over 4 years divided by taxable wages for the same time. For 2026 the total unemployment insurance rate for a qualified employer runs from 0.24 percent to 6.00 percent, and the employment administration fund adds 0.02 to 0.03 percentage points.
As of November 2026, ESD builds the rate from an experience rating tax, with the experience rate capped at 5.4 percent, a shared-cost social tax and a contribution to the employment administration fund, and says the experience tax and the social tax together cannot exceed 6 percent. ESD defines a qualified employer as one that filed all quarterly reports and made all payments, including penalties and interest, by the due date, reported employment in the last 12 months and filed no “no payroll” report for four or more consecutive quarters in the last 2 years. ESD mails the annual tax rate notice each December, and the rate applies to the entire next calendar year.
What is the current Washington Paid Family and Medical Leave premium rate and how do I apply it?
For 2026 the Paid Leave premium is 1.13 percent of each employee’s gross wages, not including tips, up to the 2026 Social Security cap of $184,500; the employee share is up to 71.43 percent, which every employer must withhold or pay, and the employer share of about 28.57 percent is mandatory for businesses with 50 or more employees.
Paid Leave states that from January 1, 2027 the premium rate is 1.2 percent, with employers paying 29.3 percent and employees 70.7 percent of the total premium. As of November 2026, ESD confirms the 2027 rate and shares. Paid Leave describes 70.7 percent as the most an employer may withhold.
Hypothetical example for an employer with 50 or more employees and one employee paid $100,000 in gross wages, below the cap.
Item
2026
2027
Total premium
$100,000 x 1.13 percent = $1,130
$100,000 x 1.2 percent = $1,200
Employee share, up to
$1,130 x 71.43 percent = $807.16
$1,200 x 70.7 percent = $848.40
Employer share
About $1,130 x 28.57 percent = $322.84
At least $1,200 x 29.3 percent = $351.60
Do I have to collect Washington Paid Leave premiums from employees, and does my size change what I owe?
Every Washington employer, whatever its size, must collect the Paid Leave employee share or pay it on the employee’s behalf and send it with the quarterly report, and size decides whether the employer share is mandatory.
Paid Leave calculates employer size each September 30 by averaging the employee headcount over the previous four quarters from quarterly wage reports, not full-time equivalent positions, as the small business page states, and the size applies for the following calendar year. “No Payroll” and processed reports count, and missing reports do not.
A business with fewer than 50 employees does not have to pay the employer share unless it has received a small business assistance grant. After a grant it must pay the employer share for all employees for three years (12 quarters). An employer may use an approved voluntary plan, which must meet or exceed the state plan’s benefits and still requires quarterly reports, and voluntary plans are not available for WA Cares.
What notices must a Washington employer give about Paid Leave?
A Washington employer must post the Paid Leave poster where it customarily posts other employment-related notices, send the state-created notice to an employee who may qualify for leave, and tell employees in writing at least one pay period before it starts withholding an employee share it had been paying.
The employer responsibilities page says to send the state-created notice “within five business days of learning they had a qualifying event.” The How Paid Leave works page words the trigger differently, telling employers to notify an employee in writing when the employee has been away seven consecutive days for reasons that could be covered, with five days to give the notice. Because the two pages word the trigger differently, confirm it with Paid Leave. Premiums cannot be withheld retroactively.
What is the WA Cares premium, and what do I do when an employee has an exemption?
The WA Cares premium is 0.58 percent of each employee’s gross wages with no Social Security cap, the employee pays it, the employer pays no share unless it elects to, and employers collect it, report it on the Paid Leave quarterly report and pay it separately.
WA Cares uses the same gross wages definition as Paid Leave, and by law the premium rate cannot exceed 0.58 percent, as the WA Cares FAQ states. An employee applies to ESD for an exemption, and ESD mails an approval letter that gives the effective date, which is the first day of the quarter after approval. The employee is responsible for giving the employer a copy, and the employer keeps it on file. Once the employer has the letter and the effective date has passed, it “must stop withholding premiums” and returns any premiums it kept withholding to the employee.
How does workers’ compensation work for a Washington employer?
Most Washington employers insure workers’ compensation through the L&I state fund, premiums for most risk classifications are based on hours worked rather than payroll, the employer pays all of the Accident Fund premium and shares the other three premium parts equally with workers, and collecting the worker share through payroll deduction is optional for the employer.
L&I’s guide says employers generally must provide workers’ compensation coverage through the state fund or through self-insurance, and large employers may qualify for self-insurance certified by L&I. L&I assigns one or more risk classifications to a state fund account based on the nature of the business.
L&I’s guide says to generally report actual hours worked and not to include sick leave hours, vacations or holidays, even when paid, and an overtime hour counts as one hour. Paid Leave counts paid time off in reported hours and ESD counts paid vacation hours, so the three agencies do not share one hours rule. An employer that chooses to collect the worker share uses the payroll deduction rate on the rate notice times the actual hours each employee worked, and “It is illegal to withhold more than the authorized amount.” A business that chooses not to deduct is still responsible for the total premium.
Does Washington have a state income tax for individuals?
The Department of Revenue states that Washington does not currently have an individual income tax, and beginning January 1, 2028 a new 9.9 percent tax applies to individuals and married couples filing jointly with annual adjusted gross income exceeding $1 million.
The 2026 Legislature established the new tax through Senate Bill 6346, and DOR says the first returns are due in April 2029. DOR says guidance on who must file, how income is calculated and other requirements “will be provided as it becomes available.” Details are on DOR’s income tax page and income tax FAQ.
Washington’s business and occupation (B&O) tax is a separate business tax and is not a payroll tax. DOR calls it a gross receipts tax, and a business cannot deduct expenses such as labor from it.
How should I handle bonuses, commissions and tips in Washington payroll?
Federal income tax withholding on bonuses, commissions and tips follows IRS Publication 15, and unemployment insurance, Paid Leave and WA Cares, workers’ compensation and the Seattle payroll expense tax each apply their own rules.
Under IRS Publication 15 for 2026, supplemental wages include bonuses, commissions, overtime pay, severance pay, awards, prizes, back pay and reported tips, although an employer may treat overtime pay and tips as regular wages instead. For supplemental wages of $1 million or less paid separately, an employer that withheld income tax from regular wages in the current or preceding calendar year may withhold a flat 22 percent or use the aggregate method.
Agency
How it treats bonuses, commissions and tips
ESD unemployment insurance
Wages include bonuses or prizes and tips the employee reported; an employee paid only a bonus, commission or tip for hours worked in an earlier quarter is reported with zero hours and a reason code
Paid Leave and WA Cares
Gross wages include commissions and bonuses, and wages may not include tips
L&I workers’ compensation
Premiums for most risk classifications are based on hours worked instead of payroll
Seattle payroll expense tax
Compensation includes commissions and bonuses and excludes tips
Does the Seattle payroll expense tax apply to my business?
For 2026 the Seattle payroll expense tax is required of businesses with $9,074,409 or more of payroll expense in Seattle in 2025 and compensation in 2026 to at least one Seattle employee of $194,452 or more; the employer pays it and the law bars withholding it from employees.
The City of Seattle calls it a business excise tax on employers, and businesses below the thresholds “do not need to file or pay this tax.” As of November 2026, the City’s 2026 rates are as follows.
Annual compensation per employee
Payroll expense under $129,634,413
$129,634,413 to under $1,296,344,132
$1,296,344,132 or more
Under $194,452
No tax
No tax
No tax
$194,452 to under $518,538
0.746 percent
0.746 percent
1.492 percent
$518,538 or more
1.811 percent
2.024 percent
2.557 percent
The City says compensation “includes all payments for personal services, including commissions and bonuses.” Returns and payments are quarterly, due January 31, April 30, July 31 and October 31.
When are Washington payroll reports and payments due?
Washington employers file an unemployment insurance tax and wage report with ESD and a combined Paid Leave and WA Cares report with Paid Leave, both due April 30, July 31, October 31 and January 31, and L&I’s workers’ compensation report and premium are due on the same four dates.
For a due date on a weekend or state holiday, ESD says the unemployment report may be sent “the next business day online or by mail,” and L&I says weekend due dates may be postmarked the following business day. The Paid Leave pages that give the due dates state no weekend or holiday rule, so confirm the date with Paid Leave when a due date falls on a weekend. The fourth-quarter 2026 reports fall due on January 31, 2027, a Sunday, which makes Monday, February 1, 2027 the next business day under ESD’s language and the postmark date under L&I’s.
How do I report new hires in Washington?
Washington employers report each newly hired or rehired employee to the DSHS Division of Child Support within 20 days of hire or rehire.
The report goes to the Division of Child Support (DCS) at the Department of Social and Health Services (DSHS), as DCS states, and ESD and DOR state the same 20-day rule and point employers to DSHS. The rule applies “regardless of their age or the numbers of hours worked,” and DCS exempts tribes, tribal-owned businesses and Indian-owned businesses located on reservations. A newly hired employee is one who has not worked for the employer before, one who returned after a separation of at least 60 consecutive days, or one who started under a new Federal Employer Identification Number.
What paid sick leave must a Washington employer provide?
Washington employers must provide paid sick leave to their employees, except for a few categories L&I names, with a minimum of one hour of paid sick leave for every 40 hours worked, regardless of full-time, part-time, temporary or seasonal status. As of November 2026, L&I’s paid sick leave page states that the leave is paid at the employee’s normal hourly rate and that employers must allow employees to use accrued leave no later than 90 calendar days after they start.
The employer pays the leave in the same pay period unless it requires verification for absences exceeding three days, which needs a written policy. The employer must notify employees in writing by their first day of employment and give a statement at least once a month of leave earned, used and available. If a local ordinance requires more generous paid sick leave, those requirements apply.
What happens if I file or pay Washington payroll reports late?
ESD, L&I and Paid Leave each list their own interest and penalties for late reports and payments, and as of November 2026 ESD charges interest of 1 percent of total taxes due per month. ESD also fines an employer that operates without registration the greater of $1,000 or 2 times the unpaid taxes for each quarter, as its quarterly reports page states. ESD’s late-payment penalty is 5 percent of total taxes due or $10, whichever is more, in the first month, an additional 5 percent or $10 in the second month and an additional 10 percent or $10 in the third month, and a late report draws $25 for each late report.
ESD can also assign a delinquent rate that adds 0.5 to 2.0 percentage points, and it says to send all late taxes and reports by September 30 to avoid one for the following year.
L&I’s December 2024 guide lists a minimum penalty of $10, interest of 1 percent per month and delinquent-account penalties of 5 percent of premium due at one month late, 10 percent at two months and 20 percent at three months. Paid Leave lists a 1 percent monthly interest charge on overdue premium balances and a penalty schedule for late reports of a warning for the first, then $75, $150 and $250 for the second, third and each additional late report.
What changes for Washington employers in 2027?
As of November 2026, Washington has published an $82,000 unemployment insurance taxable wage base and a 1.2 percent Paid Leave premium rate for 2027, L&I has proposed a 4.9 percent average increase in workers’ compensation hourly rates, and the new individual income tax begins in 2028, not 2027.
Second Substitute House Bill 2345 takes effect January 1, 2027 and changes how contributions are distributed between family and medical leave premiums without affecting how the total premium is divided between employees and employers. Paid Leave says employer pick-up contributions are not considered gross wages for Paid Leave or WA Cares, and it tells employers to notify employees that the new rate starts January 1, 2027 and to collect it each pay period from that date.
The WA Cares rate cannot exceed 0.58 percent by law, and L&I’s 4.9 percent proposal is an average that varies by employer.
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