After Washington state’s minimum wage increases take effect on New Year’s Day, many workers might expect their paychecks to feel a little larger. For many, they won’t — not for long, anyway. Higher prices for the goods and services that they use will erode those gains, and some employers will respond to rising labor costs by cutting hours or jobs.
But there’s another reason many workers — minimum-wage workers and otherwise — won’t have as much as they thought they would in the new year: The state will start taking even more of their wages to fund a program many of them will never use and that increasingly benefits higher-income households.
Starting Jan. 1, 2026, Washington’s Paid Family and Medical Leave (PFML) payroll tax will rise again, this time to 1.13% of gross wages. That increase is automatic under current law and represents yet another pay cut for W-2 workers across the state.
This isn’t a surprise. It’s exactly what some of us warned about years ago. Build it and claims will come.
Washington’s PFML program — sold as an “innovative” and “popular” worker benefit — is projected to run a $350 million deficit by 2029. And workers are now being asked to shoulder yet another payroll-tax increase to keep the program afloat.
PFML’s design has always been flawed. It is funded through payroll deductions — about 72% from employees and 28% from employers — and it pays a partial wage replacement to those who take time off for family or medical reasons. For many workers, especially those living paycheck to paycheck, that trade-off makes taking leave financially unrealistic. Many lower-income workers simply cannot afford the income loss that comes with taking leave. Still, they have to pay the tax.
The tax started at 0.4% of wages in 2019. It has already more than doubled to 0.92% in its short lifetime, and it's scheduled to rise to 1.13% for 2026. At that level, PFML sits just below the program’s 1.2% statutory cap, and Democratic lawmakers who rule Olympia seem more interested in busting the rate cap than reining in costs.
Legislators have already floated a proposal to raise the cap as high as 2% of wages — a move that would nearly double the rate again. That proposed legislation will be considered again in the coming legislative session.
Everyone pays, not everyone benefits
Using the average Washington state worker wage of $95,160 a year in 2024, such a worker will pay about $768 in payroll deductions for the program in 2026, with her employer contributing another $307. That’s $1,075 that will be taken out of the worker’s compensation — for benefits most workers never use. (Workers can calculate the cost to them in 2026 here: https://paidleave.wa.gov/estimate-your-paid-leave-payments/.)
Supporters often describe PFML as “social insurance.” In practice, it functions as a regressive payroll tax that requires lower-wage workers to subsidize higher-income households. The program's use makes that clear.
According to information provided to me by the Employment Security Department, in fiscal year 2024, workers earning $61 or more per hour used PFML nearly twice as often as the lowest-wage workers. In fiscal year (FY) 2025, higher-income workers used PFML more than twice as often as those in the lowest wage group. Usage among the bottom wage quintile has fallen steadily — from 12% of all claims in FY 2023 to just 8% in FY 2025. Meanwhile, participation among top earners has continued to rise, increasing from 16% to 18% of total users. (Middle-income earners make up the bulk of claims.)
Other changes in 2026
Despite the program’s shaky finances, lawmakers continue to expand it. Starting in 2026, the minimum amount of time an employee must miss in a week to be eligible for paid leave goes from eight hours down to four, and job-protection rules are expanded to cover smaller employers. Each expansion increases program costs, creates obstacles for employee benefits from their employers and pushes the fund closer to insolvency — guaranteeing future tax hikes or benefit cuts.
PFML is a worker- and employer-paid perk for only some, much like WA Cares will be one day. Layer these programs together and a pattern emerges: Washington state is building an income-tax-by-installment, carved up into payroll deductions that quietly reduce take-home pay. This year, Democratic leaders in the state are also pushing an outright income tax on high earners. If enacted, despite the state’s history, constitution and the Legislature’s passage of Initiative 2111 in 2024, the income tax will very likely end up applying to those who are not among the state’s highest earners.
If lawmakers truly wanted a safety net for workers facing hardship, they would fund it transparently through the general fund. Instead, they have built a worker-financed benefit machine that never stops eating wages.
PFML is a paycheck penalty masquerading as compassion, and it harms low-income workers the most.
