How to Calculate Employer Payroll Unemployment Taxes in Washington

by Grace Ferguson, studioD

Most employers in Washington are required to pay federal and state unemployment taxes on a certain amount of wages paid to employees for the year. The Internal Revenue Service collects federal unemployment tax, and the Washington State Employment Security Department collects state unemployment tax. Federal unemployment tax rates apply to all applicable employers in the United States; however, the Washington unemployment tax rate varies by employer.

Obtain your state unemployment tax rate from the state unemployment agency. In December of each year, the agency sends employers their tax rate for the following year. Your rate depends on the number of former employees who have drawn benefits on your account and the size of your payroll.

Determine the state’s annual wage base. As of 2011, Washington’s annual wage limit is $37,300 – you pay unemployment tax up to this amount of wages paid to each employee for the year.

Calculate state unemployment tax according to the rate the agency sends you. For example, the estimated average rate for 2011 is 2.44 percent. If that is your rate, multiply it by $37,300 to get the cost per employee for the year. If an employee does not earn the annual wage base, pay unemployment tax on whatever amount she earned.

Compute federal unemployment tax at 6 percent of the first $7,000 paid to each employee, as of July 1, 2011. If you paid your state unemployment tax as required, you may take a credit of 5.4 percent against your federal unemployment tax, which drops your Federal Unemployment Tax Act rate to 0.6 percent.


  • The state unemployment department requires you to perform quarterly reporting; include each employee’s name, Social Security number, wages paid and number of work hours in the report. The IRS requires you to perform annual reporting.

About the Author

Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.

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