How to Register for Washington State Payroll Taxes: Employer Guide

Getting payroll taxes set up in Washington State is one of the first steps employers need to take when hiring employees in the state. It ensures compliance with state tax laws and avoids complications with payroll processing. The process is straightforward once you understand the requirements.

Washington has clear guidelines for employers who need to register for payroll taxes, including specific wage and employment thresholds. Meeting these requirements means you're responsible for registering and remitting payroll taxes on behalf of your employees. Missing the mark can lead to penalties or delays in getting your business running smoothly.

This guide walks through the foundational steps for registering for payroll taxes in Washington State. It breaks down who needs to register, when thresholds apply, and how to start with the business license application process.

Washington Employer Requirements

Businesses paying wages to employees in Washington must register for payroll taxes. This includes any employer who pays $1,500 or more in wages during a calendar quarter. Additionally, if you employ at least one individual on any day across 20 different weeks in a calendar year, you are required to register. These thresholds apply regardless of the type of business or industry.

The registration process begins with completing a Washington Business License Application. This application is the gateway to obtaining a Unified Business Identifier (UBI), which is required to open employer tax accounts. Without a UBI, employers cannot set up payroll accounts or report wages to state agencies.

Employers meeting the wage or employment thresholds should act quickly to register to avoid penalties or delays. The Washington Business License Application serves as the foundation for compliance, ensuring businesses meet state requirements from the start.

Unemployment Insurance Registration

In Washington State, employers paying wages must register for unemployment insurance (UI) through the Employment Security Department (ESD). Registration ensures that businesses comply with state requirements for funding unemployment benefits for eligible workers.

The process begins when employers submit a Washington Business License Application. Filing the application online or by mail automatically establishes an unemployment insurance account with the ESD. After the account is created, the state assigns a tax rate based on factors like industry classification, claims history, and the employer's experience rating. New employers typically start with a standard rate until enough data exists to calculate an experience-based rate.

The total tax rate includes contributions for both unemployment insurance and the Employment Administration Fund (EAF). Employers must track their assigned rates and understand how they influence overall payroll tax obligations.

Quarterly tax and wage reporting deadlines are non-negotiable. Reports must be filed with the ESD by the last day of the month following the end of each quarter. Late submissions can lead to penalties, interest charges, and payroll headaches. Staying ahead of filing deadlines helps avoid unnecessary complications.

Voluntary Contribution Option

Some employers in Washington State can lower their unemployment insurance tax rate by making voluntary contributions. The ESD provides eligible employers with an opportunity to make additional payments by a specified annual deadline. These payments improve the employer's account balance, which can reduce the assigned tax rate.

While voluntary contributions offer potential savings, they are non-refundable. Employers should carefully calculate whether the reduction in the tax rate outweighs the cost of the additional payment. Reviewing account details and consulting with a tax professional can help determine if this option is financially beneficial.

Workers' Compensation Requirements

Washington requires employers to purchase workers’ compensation coverage directly through the Department of Labor & Industries (L&I). Private insurers are not an option, making it necessary for all businesses with employees to comply with this state-specific system.

To register for workers' compensation, employers set up an account when completing the Washington Business License Application. The application collects details about the nature of the business and the types of jobs employees will perform. Based on this information, L&I assigns risk class codes that reflect the level of risk associated with each job type.

Each risk class code comes with a specific premium rate. For example, physically demanding roles like construction have higher rates than office-based administrative roles. Accurate employee classification is non-negotiable. Misclassification can result in unexpected costs or penalties, so employers need to review assignments carefully.

Workplace safety is another key component tied to workers' compensation requirements. Employers should create a written safety plan or accident prevention program designed to address specific hazards within their business. A proactive safety approach not only reduces the likelihood of workplace injuries but can also lead to lower insurance costs over time.

Paid Family and Medical Leave

Washington employers must participate in the Paid Family and Medical Leave (PFML) program, a mandatory system that provides wage replacement benefits to employees during qualifying family or medical leave. Employers are responsible for managing deductions, remitting premiums, and ensuring compliance with state requirements.

All businesses deduct PFML premiums directly from employees' wages. For 2025, the total premium rate is 0.8% of an employee’s gross wages, up to the Social Security wage cap. Employees contribute 73.22% of the total premium, which employers withhold from each paycheck.

Employers with 50 or more employees must also pay the remaining 26.78% of the premium. Smaller employers (fewer than 50 employees) are exempt from this employer share but remain responsible for withholding and submitting the employee portion.

Registering and Verifying PFML

Employers must register with the Employment Security Department (ESD) to set up a PFML account. Businesses already registered for unemployment insurance are automatically assigned a PFML account, but employers should log in to confirm the account is active and accurate.

Verify that details such as the Unified Business Identifier (UBI), business name, and employee count are correct. Any errors or missing information should be addressed immediately by contacting the ESD.

Eligibility and Hours

Employees qualify for PFML benefits by working at least 820 hours during the qualifying period. The qualifying period consists of the first four of the last five completed calendar quarters or the last four completed quarters, depending on which provides the best benefit to the employee.

Hours worked across multiple Washington employers count toward this total. Track hours closely to ensure accurate eligibility reporting.

Withholding and Remitting

Employers must calculate PFML premiums based on gross wages, including salaries, hourly pay, tips, bonuses, and other compensation like the value of stock. Deductions must be accurate to avoid underpayment or overpayment issues.

Quarterly reporting and remittance are required by the last day of the month following the end of each quarter. Employers must submit:

Total hours worked by each employee.
Total wages paid to each employee.
Employee contributions withheld from wages.

Timely submissions are non-negotiable. Late reports result in penalties and interest charges. Double-check calculations and submit payments promptly to stay compliant with Washington's PFML program.

WA Cares Fund Requirements

The WA Cares Fund is Washington’s state-mandated long-term care insurance program. It provides financial assistance for residents who need services like in-home care, nursing facilities, or other long-term support. Contributions come directly from employee wages through payroll deductions.

Who Must Contribute

Most employees working in Washington must pay into the WA Cares Fund. This requirement applies to all non-exempt employees, regardless of whether they work part-time or full-time. Employees who live outside of Washington but work within the state are also generally required to contribute.

Current Rate

The payroll deduction rate for the WA Cares Fund is set at 0.58% of gross wages. This percentage applies to all taxable income, including salaries, tips, and bonuses. Unlike some other payroll taxes, there is no upper limit or wage cap, so deductions continue regardless of income level. Employers must calculate and withhold contributions accurately to avoid compliance issues.

Exemptions

Certain workers qualify for exemptions from the WA Cares Fund. These exemptions include:

Veterans with a 70% or higher service-connected disability rating.
Out-of-state residents employed in Washington. Eligible workers can apply for an exemption if they meet the residency criteria.
Self-employed individuals. Participation is voluntary for independent contractors and sole proprietors, but they may opt into the program if desired.

Employees must formally apply for exemptions, and approvals are granted by the state. Employers should retain exemption documentation to ensure accurate payroll processing.

Local Payroll Tax Considerations

Businesses in Washington State must stay alert to payroll tax obligations imposed by certain cities. Alongside state-level requirements, local taxes can significantly impact payroll management, especially for larger employers operating in specific regions.

Seattle Payroll Expense Tax

In Seattle, large employers face an additional payroll expense tax. This tax applies to businesses with annual payroll expenses of $7 million or more for employees performing work within Seattle city limits. The rates depend on two factors: the employer's total annual payroll and the individual compensation levels of employees.

Employers are required to track where employees physically perform their work to calculate the tax accurately. For instance, employees who split their time between Seattle and other locations must have their payroll expenses allocated proportionally. Businesses meeting the threshold must register with the City of Seattle, file annual reports, and remit payments according to the city's guidelines. Non-compliance can lead to audits and financial penalties, so precise reporting is non-negotiable.

Additional Local Taxes

Other cities and counties in Washington may have payroll-related taxes or requirements that vary by location. It's important to check municipal government websites to identify local tax obligations tied to payroll.

For example:

Spokane: Employers may need certain licenses that require payroll reporting as part of the application or renewal process.
Tacoma: The Business and Occupation (B&O) tax may include reporting on wages depending on the industry and business classification.

Local payroll taxes often have distinct thresholds or filing requirements compared to state-level taxes. Employers should clearly document employee work locations and hours to ensure they meet all local obligations without errors.

Steps to File and Pay Payroll Taxes

Filing and paying payroll taxes in Washington requires precise steps to ensure compliance and avoid penalties. By setting up the necessary accounts, submitting accurate quarterly reports, and meeting deadlines, employers can manage obligations smoothly and efficiently with payroll software.

Establishing an Online Account with Secure Access Washington (SAW)

The first step is creating an account with Secure Access Washington (SAW). This account is the gateway to essential systems like the Employment Security Department (ESD) and the Department of Labor & Industries (L&I).

To get started:

Go to the SAW website and select "Sign Up".
Provide an email address, create a username and password, and follow the instructions for account setup.
Verify the account by clicking the confirmation link sent to the registered email.

Once the SAW account is active, link it to the specific services required for payroll tax management. For unemployment insurance, connect the account to ESD’s Employer Account Management Services (EAMS). For workers’ compensation, integrate it with the My L&I portal. Each connection requires entering the Unified Business Identifier (UBI) and other business details.

Submitting Quarterly Reports

Employers must submit reports for unemployment insurance, workers' compensation, and Paid Family and Medical Leave (PFML) every quarter. Each system has distinct reporting processes that demand attention to detail.

Unemployment Insurance Reports: Log in to EAMS through SAW. Navigate to the "Quarterly Reporting" section, enter employee wages, hours worked, and other required data. Review the calculated tax amount and complete payment online.
Workers' Compensation Reports: Access the My L&I portal. Enter hours worked by employees in each risk classification and verify premiums based on assigned rates. Submit both the report and payment electronically.
PFML Reports: Use EAMS to report gross wages, employee hours, and withheld premiums. Double-check totals, submit the report, and remit the premiums by the deadline.

Confirmation receipts from each system should be saved for record-keeping and future reference.

Best Practices for Meeting Deadlines

Staying on schedule with payroll tax deadlines prevents penalties and ensures compliance. Employers should:

Set calendar reminders for the last day of the month following each quarter to avoid missed filing deadlines.
Regularly log into EAMS and My L&I to monitor reporting requirements and updates.
Review payroll data weekly to ensure accuracy before submission.

For example, reports for the first quarter (January–March) are due by April 30. Late submissions can quickly lead to fines, so prioritizing timely filing is non-negotiable.

Penalties for Late Filing or Errors

Washington enforces penalties for late or incomplete payroll tax filings. Employers who fail to meet requirements may face:

Unemployment Insurance Penalties: Fines of at least $25 or 10% of the overdue tax amount, with additional interest on unpaid balances.
Workers' Compensation Penalties: Charges starting at $10 or 1% of the unpaid premium, plus interest for extended delays.
PFML Penalties: Fines based on unpaid premiums, along with accrued interest for late payments.

Errors in reporting can also result in penalties or require time-intensive corrections. Employers should verify all entries before submission to avoid unnecessary issues. Accurate reporting keeps the payroll process straightforward and compliant.

Common Questions about Washington Payroll Taxes

Payroll taxes in Washington come with unique rules that every employer must follow. Below are straightforward answers to some of the most frequently asked questions to help you stay on top of the requirements and avoid compliance issues.

"How do I register for payroll in Washington state?"

To register for payroll taxes in Washington, start by filing a Washington Business License Application. This process assigns your business a Unified Business Identifier (UBI), which is required for setting up tax accounts. Once you have the UBI, register with the Employment Security Department (ESD) for unemployment insurance and the Department of Labor & Industries (L&I) for workers' compensation.

Ensure your Paid Family and Medical Leave (PFML) account is active through the ESD's Employer Account Management Services (EAMS). Lastly, check for any city or county-specific payroll tax obligations, such as Seattle's payroll expense tax, to confirm you've covered all bases.

"How much is payroll tax in WA state?"

Washington payroll taxes vary depending on several programs:

Unemployment Insurance: Rates are determined by your industry and claims history, with new employers assigned a standard rate.
Workers' Compensation: Premiums depend on employee risk classifications, with higher rates for jobs involving more physical risk.
PFML: Total premium is 0.8% of gross wages, split between employee contributions (73.22%) and employer contributions (26.78%) for businesses with 50+ employees.
WA Cares Fund: The rate is 0.58% of gross wages, fully funded by employee payroll deductions.
Local Taxes: Cities like Seattle impose additional payroll taxes based on annual payroll expenses and employee compensation levels.

Washington does not have a state income tax, so there's no general income tax withholding.

"Does Washington state have payroll withholding tax?"

Washington does not require traditional income tax withholding. However, employers must withhold specific program contributions from employee paychecks, including:

PFML: Deduct 73.22% of the 0.8% total premium from employees' wages.
WA Cares Fund: Withhold 0.58% of gross wages, with no upper earnings cap.

While unemployment insurance and workers' compensation are employer-funded, accurate reporting of wages and hours is required for proper calculation.

"How do you tax employee payroll?"

Payroll tax obligations in Washington are program-specific, and each has its own rate structure and calculation method:

Unemployment Insurance: Rates are assigned annually based on industry and claims history.
Workers' Compensation: Premiums are calculated per hour worked, using risk-based classifications.
PFML: Apply the 0.8% premium to gross wages and split contributions as required.
WA Cares Fund: Deduct 0.58% of gross wages directly from employees.
Local Taxes: For cities like Seattle, calculate based on payroll thresholds and employee compensation levels.

Accurate tracking of employee hours, wages, and classifications is necessary for compliance. Employers should use payroll management systems to streamline calculations and ensure timely payments.

Ongoing Requirements

Managing payroll taxes in Washington State doesn't end after registration. Employers need to stay on top of yearly updates and maintain accurate records to ensure smooth operations and compliance. Small adjustments to rates or classifications can significantly impact payroll processes, so regular attention is necessary.

Annual Rate Updates

Washington agencies issue updated tax and premium rates every year. These updates affect unemployment insurance, PFML contributions, and WA Cares Fund deductions. Employers must review the notices sent by the Employment Security Department and the Department of Labor & Industries to avoid errors in payroll processing.

Here's what to focus on:

Unemployment Insurance: Rates change annually based on employer-specific factors like your industry and claims history.
PFML: The total premium and the split between employee and employer contributions may adjust at the start of each year.
WA Cares Fund: While the current rate is 0.58% of gross wages, remain alert to any state announcements regarding changes.

Update payroll systems promptly with the new rates to prevent under- or over-withholding. Missteps here can lead to penalties or unnecessary administrative work.

Workers' Compensation

The Department of Labor & Industries assigns annual risk classifications and premium rates that reflect the nature of work performed by employees. Employers receive notices detailing these updates, which must be carefully reviewed to ensure accurate payroll calculations.

Steps to follow:
1. Confirm Risk Class Codes: Verify that each employee's assigned code aligns with their job duties. Misclassification can result in higher premiums or compliance issues.
2. Adjust Rates: Update payroll systems to reflect the new rates tied to each classification.

If discrepancies arise, contact L&I immediately to resolve them. Accurate classifications and rates help manage costs and maintain compliance.

Record-Keeping

Washington requires employers to keep detailed records for payroll reporting and auditing purposes. Accurate documentation supports compliance and simplifies quarterly filings.

Maintain the following:

Employee Wages: Gross wages, hours worked, and deductions for unemployment insurance, PFML, and WA Cares.
Classifications: Risk codes for workers' compensation and job details tied to payroll tax reporting.
Time Logs: Total hours worked for each employee, especially for calculations tied to state programs.

Retain records for at least four years to meet state guidelines. Organized files reduce stress during audits and ensure easy access to historical data.

Staying Compliant

Payroll tax laws and requirements are not static. Employers should regularly review official updates from agencies like the Employment Security Department and the Department of Labor & Industries. For complex situations, consulting an HR expert or tax professional can provide clarity and prevent missteps.

HR platforms designed for payroll management can also streamline compliance. They often automate tax rate updates, track deadlines, and consolidate reporting. While optional, these systems can save time and reduce the risk of errors.

Navigating payroll taxes in Washington State requires attention to detail and a commitment to ongoing compliance. By understanding the registration process, keeping accurate records, and staying informed about updates, you can confidently manage payroll obligations. If you're looking for a comprehensive solution to streamline payroll and HR tasks, book a demo with GoCo today and discover how we can help you save time and reduce compliance risks.