Governor Signs Bill Delaying WA Cares Payroll Tax

Date: January 26, 2022

HB 1732 pushes back implementation by 18 months

Gov. Jay Inslee signed House Bill 1732 into law on January 27, giving small-business owners a little breathing space before they begin paying the 0.58% tax on employee wages to fund the “WA Cares” long-term services and supports program, which was established to provide qualifying Washington residents with a $36,500 lifetime benefit to help with certain medical and personal assistance needs later in life.

NFIB and other business groups had been briefed on January 4 by Washington State House Speaker Laurie Jinkins, House Majority Leader Pat Sullivan, and House Deputy Majority Leader Larry Springer on their caucus’ plan to delay implementation of a new payroll tax that technically took effect New Year’s Day.

The House approved HB 1732 on January 19 on a 96-1 vote. A week later the Senate passed it on to the governor on 46-3 vote.

Rep. Sullivan pre-filed HB 1732, which pushed program implementation, including payroll tax collections, back 18 months to July 1, 2023. The bill also requires employers to refund any taxes deducted from worker paychecks between January 1, 2022, and the new implementation date.

The WA Cares program came under heavy fire late last year due to its new payroll tax, as well as issues with benefit eligibility. Concerns were raised about the program taxing workers with less than 10 years until retirement who would not vest in time to receive the benefit; denial of benefits for vested Washingtonians who move out-of-state; and individuals working in Washington while living in another state, who would be required to pay the tax, but ineligible to receive the benefit.

In response, Gov. Jay Inslee, Speaker Laurie Jinkins, and Senate Majority Leader Andy Billig announced in mid-December that the state’s Employment Security Department would not collect assessments from employers, and that no penalties would result from filing errors or non-payment of the tax, in April 2022, allowing the Legislature time to act.

Besides the 18-month implementation delay, HB 1732 also allows workers born before January 1, 1968, to receive a 10% benefit for each year they pay the WA Cares tax before retirement, up to the full $36,500 benefit.

NFIB supported HB 1732 in order to give small employers, and the workers they support, more time before the tax must be deducted and remitted to the state. 

For more information about NFIB’s legislative priorities and activities, contact Washington State Director Patrick Connor at [email protected] or 360-786-8675.



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