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What’s Next for the City of Seattle Income Tax?

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Last week the Seattle City Council approved an ordinance adopting a city income tax on residents above certain revenue thresholds. Details of the tax are below. However, significant hurdles exist that will likely delay and ultimately render the ordinance unenforceable.

State law currently prohibits cities from imposing tax on net income. Additionally, Seattle’s income tax could also violate the state constitution which requires taxes to be “uniform upon the same class of property.” This has been interpreted by the courts to prohibit income taxes. Lawsuits challenging the ordinance are expected to be filed.

The real intent of the ordinance may be to challenge the current state restrictions on an income tax.

Details of the Seattle income tax:

  • Applies to income above $250,000 for single filers or $500,000 for joint filers based on federal returns, indexed to inflation
  • Applies to residents and statutory residents of Seattle
  • 2.25% income tax on income above thresholds
  • Credits are available for income taxes paid to other state or local jurisdictions

We will be watching for any new developments and will provide updates as they happen. If you have any questions, please contact your tax professional at Berntson Porter & Company, PLLC at 425-454-7990. We’re here to help!