News & Resources


Seattle Passes New Head Tax

BY: APA Staff | 06/01/18

Effective January 1, 2019, through December 31, 2023, all for-profit companies doing business in Seattle, Washington, that gross more than $20 million per year in the city will be required to pay $275 per employee, per year. The employee hours tax – also referred to as a head tax – will be based on the employer’s 2018 revenue [Seattle Council Bill 119250, L. 2018]. The ordinance was recently signed into law by Mayor Jenny Durkan.


The tax applies to all employees who work in the city, whether they are: (1) full-time employees (also referred to as full-time equivalents or FTEs), defined as working at least 480 hours in a quarter of a calendar year or (2) part-time employees working fewer than 480 hours in a quarter of the calendar year. Temporary employees (temps) supplied by temporary employment agencies (temp agencies) are also covered.

Tax Calculation

The tax will 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. Employee hours worked exclude vacation and sick leave hours and hours worked outside of the city. Businesses will need to calculate and report the number of hours worked within the city for employees who work both within and outside of Seattle.


Businesses exempt from the tax include: businesses with a taxable gross income of $20 million or less in the most recent complete calendar year (2018 for the 2019 tax); federal and state government entities; nonprofits; hospitals; businesses providing comprehensive healthcare services if at least 25% of their services are provided to patients covered by Medicaid or Medicare and to patients with no third-party payor; and businesses preempted from taxation by cities under federal and state law.

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