Washington Long Term Care Tax Update

Washington State was the first state in the US to develop a long term care payroll tax to help fund the high cost of long term care. This program was set to take place in January 2022, but was delayed until July 2023. Employers are required to begin deductions on this tax, 0.58% of income, in July 2023. The only way to stop the tax from occurring is to provide your employer with the special exemption letter that was obtained from the State of WA.

In order to acquire this exemption, you had to have purchased a long term care policy prior to November 2021 and applied to the state by 12/31/2022. If you failed to obtain a policy and also the exemption letter, the window has closed and you will be required to pay the tax.

The program will provide a lifetime benefit of $36,500 (adjusted annually for inflation), but may require you to pay into the program for 10 years before becoming eligible. There has been discussion on that issue, but the legislation has yet to be proposed. However, there was some follow up legislation on other items, specifically allowing certain workers to be exempt from the program and tax.

They include people who:

Live outside of the state, but work in WA (living in Portland and driving to Vancouver)

Spouse of activity duty service member

Those that have non-immigrant work visas

Are veterans with a 70%+ service-connected disability

Reach out to our benefits team at 253-756-2000 for additional information