18 March 2025 Seattle voters approve new payroll expense tax for social housing Seattle, Washington voters approved citizen-led ballot initiative Proposition 1A, which, effective January 1, 2025, imposes a new employer-paid Social Housing Tax to fund the Seattle Social Developer, a voter-approved agency created in February 2023 to support mixed-income social housing. This new tax is expected to generate annual revenues of $52 million. The Social Housing Tax applies to businesses operating in Seattle (with limited exceptions). Employers will be taxed 5% of the excess compensation (over $1 million) paid to an employee in the prior calendar year. (Seattle Municipal Code Section 537.) For 2025, the Social Housing Tax return and payment are due January 31, 2026. Thereafter, the return and payment are due quarterly on the last day of the month following the close of the calendar quarter. Additional guidance, including the quarterly form, will be published here. The Social Housing Tax represents a substantial increase in payroll tax expenses currently paid by Seattle businesses. Since 2021, most Seattle employers have been subject to the "jumpstart" Payroll Expense Tax, which funds services to Seattle's low-income population. (Tax Alert 2020-1736.)
Document ID: 2025-0706 | ||||
