Seattle Head Tax

Seattle is imposing an employee hours tax on businesses that have at least $20 million in annual gross revenue.

When does it go in affect?

January 1, 2019 – December 31, 2023

How is employee defined?

“Employee” means any person who performs work, labor, or services for a business, is on the business’s payroll, and performs any part of their duties within the City of Seattle. “Employee” also includes all full-time, part-time, and temporary employees or workers on the business’s payroll.

How is the tax calculated?

Maximum tax of $275 per employee per year is calculated as follows.

The quarterly amount of the tax shall be equal to the employee hours worked within the City during each quarter of the calendar year, multiplied by the rate of $0.14323 per hour worked. (Or using the Alternate Full Time Equivalent [F.T.E.] calculation method)

  • The employee hours worked exclude vacation and sick leave hours.
  • If an employee works both within and outside the City, it will be the responsibility of the business to calculate and report the number of hours worked within the City.

When is it due?

Taxpayers that file and pay their business license tax under on a quarterly basis shall file and pay the employee hours tax on a quarterly basis and taxpayers that file and pay their business license tax under on an annual basis shall file and pay the employee hours tax on an annual basis.

Who is Exempt?

  • Insurance businesses and their agents
  • Businesses that only sell, manufacture, or distribute motor vehicle fuel
  • Businesses that only distribute or sell liquor
  • Federal and state government agencies and subdivisions
  • Non-profit organizations
  • Hospitals
  • Businesses engaged primarily in the provision of comprehensive healthcare services, that provide at least 25% of their services to patients covered by Medicaid or Medicare and to patients who have no third-party payor.
For more information see: Seattle Council Ordinance CB 119250

The materials posted in this article are for informational purposes only and should not be regarded as accounting or tax advice provided by YR Tax Compliance LLC. These materials have been prepared by professionals, however they should not replace professional services, and the user should seek advice before acting on any information presented. Every situation is uniquely different, and could make a world of difference on implementation of specific regulations.  YR TAX Compliance LLC assumes no obligation to provide notification of changes of tax laws, regulations or other factors that could affect the information posted.