Despite reports, Washington's long-term care tax could start Jan. 1

Washington Gov. Jay Inslee on Thursday clarified what will be happening with the payroll tax meant to fund the state’s new long-term care benefit.

The tax, 0.58% of a worker’s total wages, is to be collected from workers by employers and then remitted to the state. Under the law, employers must collect that tax from their employees starting Jan. 1.

Responding to issues raised about the new program, Democratic leaders in the state Senate asked Inslee to delay collecting the tax from employees while lawmakers work to resolve those problems. But on Thursday, Inslee reiterated that he does not have authority to do so.

“There is some inaccurate reporting and misinformation about the Legislature’s long-term care bill, which under the law requires employers to withhold money from employee wages,” he tweeted. “Only the Legislature has the authority to eliminate that requirement.”

However, the Legislature does not convene for next year’s legislative session until Jan. 10. Last week, Inslee asked the state Employment Security Department to refrain from collecting the tax from employers while the Legislature is in session, which many understood to mean that employees would not see their wages garnished.

Inslee took to Twitter Thursday to say that was incorrect. The situation is this: Under the current law, employers must take the tax from their workers’ paychecks starting next month, but the state will not be collecting that tax from employers. The hope is that the Legislature will amend the law and delay collection of the tax during the upcoming 60-day session.

“As an employer, the state of WA is following the law and will have to begin collecting money from state employee paychecks on Jan. 1,” Inslee tweeted. “Many other private employers are doing the same, and others are hoping that the Legislature will change the law.”

“However, if the Legislature fails to do so, employers will still be legally obligated to pay the full amount owed to state ESD to begin the long-term care program,” he added.

Democratic leaders in the Legislature have promised to amend the law and delay collection of the tax while they make fixes. If they do, Inslee spokesperson Tara Lee said any money taken from employee paychecks between Jan. 1 and the time the Legislature changes the law will be refunded.

The tax is meant to fund the state’s new long-term care benefit, known as the WA Cares Fund. Established by the Legislature in 2019, it acts as a state-run long-term care insurance program. Starting in 2025, eligible adults will be able to access up to $36,500 for long-term care costs such as delivered meals and in-home care.

Millions of workers are subject to the tax, but the state gave all of them the chance to opt-out. To do so, a worker had to have their own private long-term care insurance before Nov. 1. From there, they could apply for an exemption. More than 450,000 workers have so far applied for an exemption.