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Proposed Seattle headcount tax looks to increase funds for affordable housing

• Seattle City Council has drafted legislation that would adopt “head-tax” on large employers (earning over $20M) in efforts to raise funds for low income housing and address issues of widespread homelessness in Seattle.

• The legislation effects 3% of companies in the city of Seattle. About 500 qualifying companies would be taxed $0.26042 per employee per hour worked in 2019 and 2020. In 2021, qualifying companies would be taxed 0.7% of total payroll. Employees covered by this tax would include full time, part time, and temporary positions. The taxation is adjusted for hours worked in the city of Seattle and excludes sick days and paid time off.

• The city is projecting that the tax would raise approximately $75 million per year, which is earmarked for around 2,000 affordable housing units (a 3% increase to the regional total of affordable units). These units would be made affordable to those who earn less than the median household income of $74,458. The city would spend 75% of the tax revenue to build affordable housing, 20 percent on homeless shelters and 5 percent on administrative costs.

• The council will take a final vote in May 2018.

Source: JLL Research, Seattle Times, Seattle City Council

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