Gov. Inslee approves 18-month delay on long-term care tax

Jan 26, 2022, 3:50 PM | Updated: Jan 28, 2022, 8:50 am
Gov. Jay Inslee, long-term care tax...
Gov. Jay Inslee signs a bill to delay the state's long-term care tax. (Courtesy photo from the governor's office)
(Courtesy photo from the governor's office)

Gov. Jay Inslee announced in a Thursday press conference that he had approved the Legislature’s delay of the long-term care payroll tax following the state Senate’s vote to delay its implementation Jan. 26.

State House passes 18 month delay for long-term care tax

The tax — known more formally as WA Cares — was originally passed during the 2021 legislative session to help cover costs of long-term care that the majority of Washingtonians are not saving for, and avoid forcing people to spend their way into poverty.

Under the tax, all W2 employees who average 12.5 hours per week were initially set to see the deductions for the tax as of Jan. 1, 2022. A person earning $50,000 a year would pay $290 a year in additional taxes. Washingtonians could opt out of the tax, but that was contingent on having a separate private long-term care insurance policy in place by Nov. 1, 2021.

It was a first-in-the-nation program when it was passed by the Legislature in 2021, but apprehension grew as its implementation drew near, with concerns over people paying into the fund not being able to access the benefit should they move out of state, or those who work in Washington but live in a border state not being able to access the benefit at all.

Then, in December of 2021, Gov. Jay Inslee instructed the state Employment Security Department not to collect the tax to allow the Legislature time to make necessary changes. But because employers were still technically permitted to begin deducting it from worker paychecks at the start of the new year, a more expansive legislative solution was drawn up.

That took the form of HB 1732, which will now delay the program for 18 months to July of 2023. The bill also “enables near-retirees to qualify for partial benefits.” Democrats in the Legislature pushed to fast-track the bill, having passed it out of the state House last week by a 91-6-1 margin, and then in the Senate this week by a 46-3 margin.

Long-term care tax could still be taken out of paychecks despite delay from Gov. Inslee

A second bill, HB 1733, was signed by Gov. Inslee this week as well, and will allow veterans with disabilities, military service member spouses or domestic partners, workers on temporary nonimmigrant visas, and employees who work in Washington but live in a different state to opt out of the tax.

KIRO Newsradio reporter Hanna Scott contributed to this story.

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Gov. Inslee approves 18-month delay on long-term care tax