Washington’s departments of Revenue and Labor and Industries have announced several tax changes that will become effective Jan. 1 for employers and employees.
State to implement new leave program
Washington’s new Paid Family and Medical Leave program is set to begin on Jan. 1, 2019. Premiums will be collected from both employers and employees. Employers should download the employer toolkit at paidleave.wa.gov/employers to prepare for this new law.
Virtually all employers in Washington must participate, including small, medium and large businesses, nonprofits, charities and faith organizations.
For 2019, employees will see 0.4 percent of their gross wages deducted to pay their share of premiums.
Employers can share the premium, contributing about 37 percent, with the employee paying about 63 percent.
Businesses that average fewer than 50 employees are not required to pay the employer portion of the premium but are required to collect or pay the employee’s portion.
Starting Jan. 1, 2019, employers must:
• Begin withholding Paid Family and Medical Leave premiums from employee paychecks, or plan to cover part, or all, of the employee’s share.
• Begin quarterly reporting, tracking hours and wages of all employees, including seasonal, temporary and part-time workers.
Passed with bipartisan support in the state Legislature in 2017, Paid Family and Medical Leave will provide every eligible employee in Washington paid time to care for themselves or a loved one through serious illness or injury, to bond with a child coming into the family, and for certain military related events. Eligible individuals may file benefit claims starting Jan. 1, 2020.
The employer toolkit, paidleave.wa.gov/employers, includes premium calculation information, reporting requirements and sample employee communications in multiple languages.
ESD has been providing information to employers, payroll companies, accountants and others throughout the year — and the agency is ramping up frequency of emails and mailers leading up to the January deadline.
New state tax system for small businesses
Small businesses that file their taxes once a year will need to use a new online system when filing their tax return, due Jan. 31.
The Washington’s Department of Revenue is offering a series of free training webinars to teach the basics of the new My DOR portal. Topics include how to set up an online tax account, file and pay taxes, and print a reseller permit.
Webinars begin Thursday, Dec. 6. Visit dor.wa.gov/mydor for the schedule.
Revenue is asking businesses that know they are done for the year to file early and avoid the January rush. If a business had no activity for 2018, it must still file a tax return and report “no business.”
Worker compensation rates drop 5 percent
The price for workers’ compensation insurance in Washington will take the largest drop —5 percent — in more than 10 years on Jan. 1. The state Department of Labor & Industries announced Dec. 3 the decrease in the average amount employers pay for the coverage.
“We’re seeing fewer injuries on the job and we’ve made improvements in helping injured workers heal and return to work,” said L&I Director Joel Sacks. “That’s good news for workers and employers, and it’s helping us significantly lower workers’ compensation costs.”
Under the lower 2019 rate, employers will pay an average $58 less per employee for a year of workers’ compensation coverage. Workers will also pay less, with their share of the cost dropping by about $6 a year. The new rates take effect on Jan. 1.
As a result of the reduction, as a group, workers and employers will pay $136 million less in premiums in 2019. Rates also were reduced about 2.5 percent in 2017.
For more information about 2019 workers’ compensation rates, see Lni.wa.gov/Rates.
Comment on L&I’s changes for salaried workers
Washington’s Department of Labor & Industries has released a draft of rules that spell out possible changes for salaried workers in our state — meaning more employees will be entitled to overtime, minimum wage and paid sick leave.
Salaried employees earning less than the salary threshold are required by law to receive overtime, minimum wage, paid sick leave and other protections of the Minimum Wage Act. The minimum pay to consider a salaried worker exempt from overtime in Washington hasn’t changed in 40 years.
L&I is considering increasing the salary threshold to between 2 and 2.5 times minimum wage starting Jan. 1, 2020, and whether the higher salary threshold should be phased in based on employer size or on geographic location.
Other possible changes include aligning the state and federal job duties tests, which are used to determine if an employee who is salaried is exempt from overtime.
Input on the latest draft proposal will be accepted online and by email through Dec. 14 at EAPrules@Lni.wa.gov, or call 866-219-7321 to inquire.
Retirement contribution limits increase for 2019
Cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019 have been announced. Internal Revenue Service issued technical guidance detailing the adjustments in its Notice 2018-83 at irs.gov.
In an abbreviated look, IRS notes the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000. The limit on annual contributions to an IRA, the first change since 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals age 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim a saver’s credit all increased for 2019, according to IRS.