What You Need to Know About Seattle’s Payroll Expense Tax in 2025

Joe Wallin

06 Nov 2025 — 1 min read

Seattle’s payroll expense tax—often called the JumpStart Tax—continues to be a major cost factor for employers with a significant presence in the city.

Who Must Pay

You’re subject to the tax if your total Seattle payroll expense exceeds $8.837 million (2024 threshold, indexed annually) and you pay at least one employee over $189,371 in 2025.

What’s Taxed

Only compensation “paid in Seattle” counts. That generally means:

The employee works primarily in Seattle, or
Performs at least 50% of their services in Seattle, or
If neither city exceeds 50%, the employee resides in Seattle.

This means hybrid and remote work arrangements can still create Seattle payroll liability.

Rates

Rates for 2025 range from 0.746% to 2.557%, depending on your total Seattle payroll size and the individual’s compensation bracket. Only amounts above the floor are taxed.

When to File

Returns are filed quarterly, with an annual true-up. The city collected roughly $313 million from this tax last year—making it one of Seattle’s top revenue sources.

New for 2025

Seattle has also enacted a separate “Excess Compensation” payroll tax on compensation exceeding $1 million per employee, effective January 1, 2025.

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Takeaway:
If your company has employees who live or work in Seattle, it’s worth reviewing your payroll sourcing methodology now. Even partial remote work from within the city limits can trigger tax exposure.

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