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--
Medicare and the Department of Human and Health Services (federal government entities) for 15 years has been warning about the increasing long-term care needs that will be taking place for Retirees. They say that 70% of retirees over the Age of 65 will need some form of long-term care.
In 2013, Washington State put "a carrot" out there for residents to purchase private plans, thereby DELAYING the option of falling into the state MEDICAID system. Some residents purchased long-term care policies with the LTC Partnership Act provisions giving them additional benefits. (see HB/legislation)
In 2021, Washington State is putting "a stick" out there in the form of an income tax to pay for a LTC Trust Fund. (see HB/legislation)
As we live longer, have better health-care preventing us from long hospital stays, taking our prescriptions, we tend to live LONGER-and therefore needing custodial