Jul 17, 2017
From KPMG TaxWatch
Washington State does not impose an income tax on individuals. On July 10, 2017, the Seattle City Council unanimously approved a measure that would impose an income tax at a rate of 2.25 percent of total income of City residents in excess of (1) $250,000 for individuals with a single/head of household/qualifying widow with dependent child filing status, or (2) $500,000 for individuals with a “married filing jointly” filing status. The mayor is expected to sign the ordinance. The tax will apply to income received after January 1, 2018. The first tax return and payment will first be due on April 15, 2019. The new tax has already come under attack as potentially violating a state law prohibition against taxing income (the Revised Code of Washington section 36.65.030 states “a county, city, or city-county shall not levy a tax on net income”), as well as various provisions in Washington’s Constitution. It appears highly likely that litigation will ensue. Proponents of the new measure argue it is necessary to protect against potential cuts to social service funding included in President Trump’s proposed budget and will make the city’s existing tax structure less regressive. It has been estimated that the tax will generate $140 million per year and, per the ordinance, the funds must be spent for lowering property taxes, replacing funds lost as a result of federal budget cuts, and providing public services. Please stay tuned to TWIST for future updates.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.