The "WHAT" and the "WHY"

On January 1st, 2021, Washington State will be taxing a special income tax to most W-2 employees who work inside the state.

The income tax will be to fund the Washington State Long-Term Care Trust Fund, which will be used for future claims made for custodial expenses. The tax is slated to start out at .058% and has no CAP on income. It might look something like this for sample Employees.

 

W- 2 Employee Sample

(no income increases factored)
 Expect to pay this annual tax (est.) 

Expect to pay this cumulative tax until retirement

(Until age 65, estimated total)
 Age 40- $100,000 income $580 per year $14,500 income tax
 Age 50- $200,000 income $1,160 per year $17,400 income tax
 Age 60- $300,000 income $1,740 per year $8,700 income tax*

*Given the 5 year 'no-claim' rule put forth by the LTC Trust Fund, a claim on the Trust fund might be denied if prior to retirement at Age 65.
Find your estimated TAX: https://washingtonlongtermcare.com/payroll/

What else could you do with your money that will be taxed?

WHY is Washington State implementing this tax? Good question! Keep reading--