Washington state payroll tax has a reputation for being easy. That reputation is half-earned. There's no state income tax — you withhold zero, remit zero, file nothing to Olympia for income tax purposes. Full stop. But two mandatory programs — WA Cares Fund and Paid Family & Medical Leave — quietly stack on top of every paycheck. Miss them on day one and ESD will find you on day ninety. The scramble to back-calculate and explain retroactive deductions to employees is brutal and entirely avoidable.
- No state income tax withholding — Washington has no personal income tax. Withhold $0 for the state.
- WA Cares Fund: withhold 0.58% of gross wages from every employee. Employee-side only for most employers.
- Paid Family & Medical Leave (PFML): split premiums between employee (~72.76% of total) and employer — unless you have fewer than 50 employees, in which case the employer share disappears.
- Federal obligations don't change — Social Security, Medicare, FUTA, and federal income tax withholding are unchanged by Washington's no-income-tax status.
- Remit both WA programs separately to the Employment Security Department (ESD) each quarter.
The Two Deductions That Actually Trip Up WA Employers
Employers set up payroll in Washington, exhale about state income tax, and then miss one or both programs on their first few runs. Then the ESD notice arrives. Here's what you actually owe.
| Program | 2026 Employee Rate | 2026 Employer Rate | Wage Cap | Who Pays |
|---|---|---|---|---|
| WA Cares Fund (Long-Term Care) | 0.58% of gross wages | $0 (most employers exempt) | No cap | Employee only |
| Paid Family & Medical Leave | ~72.76% of total premium | ~27.24% of total premium (50+ employees only) | Social Security wage base | Both (employer exempt if <50 employees) |
Rates sourced from WA Employment Security Department (ESD). PFML total premium rate resets annually — verify the current figure at esd.wa.gov before running your first payroll of the year.
Employers with fewer than 50 employees are exempt from the employer share of PFML premiums. That doesn't get you out of the employee side. Withhold it. Remit it. Every quarter, without exception.
Employees can apply for a private long-term care insurance exemption from WA Cares Fund. When ESD approves one, stop withholding immediately — and keep that approval letter in the employee's file indefinitely. The application is the employee's responsibility. Acting on the approval the moment it arrives is yours.
How to Calculate a Washington Employee's Deductions (Step by Step)
- 1 Determine gross wages for the pay period.
- 2 WA Cares deduction: Multiply gross wages × 0.58%. Comes out of the employee's check — unless they hold an ESD-approved exemption on file.
- 3 PFML employee deduction: Multiply gross wages × the employee's share (72.76% of the current total premium rate), up to the Social Security wage base.
- 4 PFML employer share (50+ employees only): Add your 27.24% employer portion as a separate business cost — never a paycheck deduction.
- 5 Remit to ESD quarterly. WA Cares and PFML go to the same agency — but as separate line items. Do not lump them into a single payment.
Consider Marcus, a Seattle café owner with 8 employees. He set up payroll correctly — no state income tax withholding, clean federal setup — and assumed he was done. Three months in, ESD flagged both WA Cares and PFML as uncollected. The back-payment wasn't catastrophic. Explaining to employees why their next check looked different absolutely was. One day of setup prevents that conversation entirely.
Federal Payroll Taxes Still Apply — Don't Get Complacent
No state income tax is a genuine advantage. It does not reduce your federal payroll tax obligations by a penny. Here's the full federal stack:
- Federal income tax withholding — based on each employee's W-4. There's no WA state equivalent to collect.
- Social Security: 6.2% employer + 6.2% employee, up to the annual wage base
- Medicare: 1.45% employer + 1.45% employee (additional 0.9% employee-side above $200K)
- FUTA: 0.6% net (after the standard 5.4% WA SUTA credit) on the first $7,000 per employee
- WA SUTA (unemployment insurance): New employer rate approximately 1.0% on the first $68,500 per employee in 2026 — verify your assigned rate with ESD, since it shifts by industry and SUTA experience rating
"Running payroll in Washington is one of the cleaner setups in the country. But only if you configure both WA programs before the first check clears."
The federal checklist is identical to every other state. Washington just removes one layer. You're working a shorter list than employers in California or New York — keep that perspective and don't let the simplicity breed sloppiness on the programs that do exist.
Washington Payroll Checklist for Small Employers (1–10 Employees)
Run through this before your first payroll — or audit against it if you've already been running. Review your Washington pay stub requirements alongside this list to make sure each deduction is labeled correctly on every check.
- ☐ Register with WA Employment Security Department (ESD) at esd.wa.gov
- ☐ Configure WA Cares Fund deduction (0.58%) in your payroll system; log any employee exemptions on file
- ☐ Configure PFML deductions — confirm your headcount relative to the 50-employee threshold and set the employee-side withholding rate
- ☐ Collect federal W-4s from every employee — there is no WA state withholding form
- ☐ File with ESD quarterly — deadlines are the last day of the month after each quarter-end: April 30 (Q1), July 31 (Q2), October 31 (Q3), January 31 (Q4)
- ☐ Issue pay stubs showing all deductions — WA Cares and PFML must appear as distinct line items, not lumped under a generic deduction
Washington is one of the easier payroll environments in the country. No state income tax is real and meaningful. But WA Cares Fund and PFML are non-negotiable, and the employer-vs.-employee split on PFML catches small business owners every single year. Get the configuration right before payroll run one. Remit quarterly to ESD. Done.
Frequently Asked Questions
Does Washington state have income tax withholding for payroll?
No. Washington has no personal income tax, so employers withhold zero for the state. WA Cares Fund and Paid Family & Medical Leave still require deductions from every paycheck, but state income tax withholding doesn't exist here.
What is the WA Cares Fund deduction rate for 2026?
The 2026 WA Cares Fund rate is 0.58% of gross wages, with no cap — it's withheld entirely from the employee. Employees with qualifying private long-term care insurance can apply to ESD for an exemption; once approved, withholding stops immediately and the approval letter stays in their file permanently.
When are ESD quarterly filing deadlines?
WA Cares and PFML premiums are due the last day of the month following each quarter-end: April 30 (Q1), July 31 (Q2), October 31 (Q3), and January 31 (Q4). Late remittance triggers penalties, so calendar these dates the same day you register with ESD.
Are small employers (under 50 employees) exempt from any WA payroll taxes?
Yes — employers with fewer than 50 employees are exempt from the employer share of PFML premiums. You still must withhold and remit the employee share each quarter. The threshold is calculated using your average monthly headcount from the prior calendar year, per ESD guidelines.
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Washington's no-income-tax status simplifies one layer of payroll — but the WA Cares Fund and Paid Family & Medical Leave premiums add two deductions every pay period that still require accurate math and quarterly ESD remittance.
- No state income tax withholding — ever
- WA Cares: 0.58% from employee only, no wage cap
- PFML: split between employer and employee (small employers skip the employer share), capped at Social Security wage base
- Remit both programs to ESD quarterly — deadlines: Apr 30, Jul 31, Oct 31, Jan 31
- Keep exemption letters on file permanently