Surprise! Not so much. Two more big payroll tax hits are coming to paychecks in January

Oct 25, 2021

The Employment Security Department (ESD) sent news out Friday that a controversial Paid Family and Medical Leave payroll tax will increase 50%, boosting it from 0.4% to 0.6%.  Officials say that to pay for up to 18 weeks of family and medical leave to some full- and part-time workers, the state needs more of your money. 

When income to pay for your household budget goes down, blame the state, not your employer, for taking more of the money you’ve earned for a state-imposed program you might never need or want. 

Sound familiar? It should. Officials are also kicking in a new long-term-care payroll tax in January.  Right now, the forced contribution — again for a program you might never need or want — is 0.58%, or 58 cents for every $100 earned, with no income cap.

The fund already isn’t solvent in the long run, which has lawmakers and members of an oversight commission warning that the tax might need to increase over time — or the already insufficient benefit for long-term care will need to decrease. That had many workers trying to get out of the tax by purchasing their own private long-term-care insurance, an option that essentially no longer exists.

Read more about the state being generous with other people’s money for paid leave on its website and in this opinion piece we wrote about a duel over the tax in 2017. 

This past legislative session, some lawmakers voted to expand the paid-leave program even further by weakening the definition of family, ensuring more increases to the tax in the future. ESD states, “Effective July 25: You can qualify for family leave if you are caring for someone who has an expectation to rely on you for care — whether you live together or not.”

Read more about that expansion in a legislative memo I wrote here.

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