Starting January 1, 2026, Seattle businesses must pay a 5% payroll expense tax on “excess compensation,” defined as compensation paid to an employee in excess of $1 million annually. This may include guaranteed payments and owner distributions from pass-through entities. With quarterly filings and evolving compliance rules, now is the time to assess the impact on your payroll. The first return is due in 2026 for the year 2025. The city will not collect the first tax payment until January 2026, when the first full year of the tax will be due. After that, payments will be made quarterly.
KOM Consulting can help you navigate SHT requirements, ensure compliance, and minimize financial risk. For more information, please check out our recent blog post or contact Mike Roben, John Katsandres, or Caleb Allen.
Email contacts:
1. mike@komconsulting.com
2. johnk@komconsulting.com
3. caleba@komconsulting.com
https://www.komconsulting.com/seattle-social-housing-tax-sht/