How does the Seattle Head Tax Apply to Businesses?

Have you heard about the Seattle head tax? This is more popularly known as the Amazon tax, a name created after the main target of the tax. This tax is officially known as the employee hours tax. This is a tax that is paid by businesses situated in Seattle for every employee that they have. This has been the cause for concern for big companies because of the amount of money that they would shell out to pay for this tax. And they will not be using discounts or voucher codes on this tax. They would have to pay the whole amount or else, they will be penalized.


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Terms of the Tax Levy

The estimate of the legislators when it comes to the number of businesses that will be affected by the tax levy is around 500 businesses. These are the companies that are earning at least $20 million in revenue per year. The list of the businesses included in the bracket is not distributed due to confidentiality disclosure rules.

You have to keep in mind that the revenue being talked about here is the amount earned within the city. The city provides a calculation or formula on how to compute the revenue of companies that worked in multiple areas in the United States. The computation of the revenue basis is also calculated based on the nature of the business. If the sales come from retailing products or providing services, the city will give you the method of computing the tax and business liability.

If you belong to service providers, that is, you have an engineering firm, architectural firm, accounting firm, or other service-related company, you will be using a different formula on how you will be taxed when you operate within the city. This is crucial because your client might be living or located somewhere else. Other factors that are taken into consideration when computing the threshold is the amount of total payroll of employees that are actually working in Seattle, and the services that you provide inside the city.


The computation of tax is as follows: you will pay a rate of 26 cents per hour in the years 2019 and 2020, or $500 per year. This is in relation to employees working full time or 1920 hours per year. You can either choose to pay the tax of $500 per employee or the actual number of hours that the employee worked.