During the 2022 Washington legislative session, Senate Bill 5873 was recently passed providing two years of unemployment insurance tax relief, mainly aimed at lowering costs for small businesses. SB 5873 reduces the unemployment insurance (UI) social tax rate for most employers in 2022 and 2023. It also reduces the 2023 rate for employers who reported ten or fewer employees for the fourth quarter of 2021.

According to the Washington Employment Security Department (WA ESD), most employers will see a reduction in their social cost factor rate for 2022 from 0.75% to 0.5%, though rates do vary based on rate class. The bill caps the social cost factor rate at 0.7% instead of 0.8% for 2023.

As a result of this bill, the WA ESD will recalculate employer tax rates for 2022. Employers should review their UI tax rate notice to identify their reduced unemployment insurance social tax rate. It should be noted that employers in the highest rate classes may not see their total tax rate change.

Our state and local tax (SALT) professionals are available to assist if you have questions about these recent changes. Please contact our SALT Team at SALT@GMCO.com.