OLYMPIA — Legislation to address Washington’s projected $13 billion budget deficit and ensure continued funding for essential services was introduced Thursday.
Senate Bill 5796, sponsored by Sen. Rebecca Saldaña (D-Seattle), would remove the cap on employer payroll taxes, imposing a 5% tax on payroll expenses above the Social Security threshold of $176,100 per year. This tax would apply only to large employers with payroll expenses exceeding $7 million annually — about 5,289 businesses statewide. The proposal is similar to Seattle’s “JumpStart” tax and includes a full credit for businesses already paying that tax.
This bill would generate $2.3 billion annually, with funds dedicated to public schools, health care, and services for vulnerable populations. Without this revenue, these critical services would face severe cuts.
“We’re at a crossroads,” Saldaña said. “Without action, budget cuts will hurt those who can least afford it — our kids, elders, and working families who already struggle to make ends meet. This bill ensures that large corporations pay their fair share, so we can invest in strong schools, accessible health care, and safe, thriving communities. It’s time we create a tax system that works for all of us, not just the wealthiest few.”
The excise tax is part of a broader revenue package introduced by Senate Democratic leaders to rebalance Washington’s tax system, one of the most unequal in the nation, with low- to middle-class Washingtonians paying a higher percentage of their income in taxes than the wealthiest households. SB 5796 seeks to correct this imbalance and provide sustainable funding for essential public services.
The full operating budget funded by these revenue proposals will be released Monday. Both the House and Senate must negotiate and agree on a final budget and revenue plan, which must be passed by the end of the legislative session on April 27.
