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Capital gains tax, minimum wage increase among new laws taking effect in 2022

Jan 1, 2022, 3:22 AM | Updated: Jan 3, 2022, 9:50 am

Redistricting, long term care tax delay...

The Capitol building in Olympia, Washington. (Getty Images)

(Getty Images)

The 2021 legislative session was a busy one in Olympia, with a handful of new laws having now taken effect in Washington state.

Capital gains tax

The Democrat-led state Legislature approved over $250,000 early in the year. While it technically takes effect at the start of 2022, it won’t officially be collected until 2023.

It’s estimated that the tax will bring in over $400 million in its first year.聽Those dollars will be used to invest in child care and early learning, among other things, as a way to balance the state鈥檚 tax code. That鈥檚 according to supporters, who insist it will impact less than 1% of the state鈥檚 wealthiest taxpayers.

The tax also faces a court challenge, led by a coalition that includes the conservative Freedom Foundation, former state Attorney General Rob McKenna, and more. Their lawsuit alleges that the levy is actually a graduated income tax, and as such, violates the state’s constitution.

The lawsuit is ongoing, with oral arguments having kicked off in August of 2021.

Long-term care tax (sort of)

The status of a long-term care tax set to begin on Jan. 1, 2022, is largely up in the air.

Under the tax, all W2 employees who average 12.5 hours per week were initially set to see the deductions for the tax as of Jan. 1, 2022. A person earning $50,000 a year would pay $290 a year in additional taxes. Washingtonians could opt out of the tax, but that was contingent on having a separate private long-term care insurance policy in place by Nov. 1.

Gov. Jay Inslee announced in mid-December that he was delaying implementation of the tax while lawmakers work to take further action on the bill, but that move came with some caveats.

Inslee鈥檚 delay doesn鈥檛 explicitly prevent employers from deducting the tax from paychecks, with his office clarifying that he 鈥渄oes not have the power to change this legal requirement on his own.鈥 As a workaround, he has instead instructed the state鈥檚 Employment Security Department 鈥渘ot to accept quarterly payments from all employers to give the legislature time to work on modifications to the program.鈥

That means it will be up to individual employers to forgo collecting the tax from paychecks, with Gov. Inslee and lawmakers promising that 鈥渢here will be no penalties or interest鈥 while lawmakers work on the bill as part of the 2022 legislative session.

Minimum wage increases

Regularly scheduled minimum wage increases are set to take effect both in the City of Seattle and across Washington state starting on Jan. 1.

In Seattle, the minimum wage for companies with more than 500 employees will increase to $17.27 an hour. That’s up from $16.69 an hour in 2021. For smaller companies (500 or fewer employees) that don鈥檛 pay least $1.52/hour toward the employee鈥檚 medical benefits and/or where the employee doesn鈥檛 earn at least $1.52/hour in tips, the minimum wage will be $15.75 an hour, marking an increase from $15.

The state minimum wage is also increasing, rising from $13.69 in 2021 to $14.49 an hour in 2022.

Felon voting rights

Starting on Jan. 1, HB 1078 will make it so former felons will be eligible to vote the moment they are no longer incarcerated, and will retain that right regardless of whether or not they can pay off post-incarceration expenses.

Prior to the bill’s passage, former felons could only regain their right to vote after completing their probation. Newly-restored voting rights to felons were also revoked if someone missed a payment on expenses incurred as part of their sentencing, including restitution payments to victims and their families.

Single-use plastics

Washington state will continue its move away from single-use plastics in 2022, when businesses will no longer be permitted to automatically include plastic utensils, cup lids, sauce/condiment packets, and containers with food orders.

Customers will still be able to ask for those items, with being that they won’t be given out by default.

A ban on single-use plastic bags took effect on Oct. 1, 2021.

 

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Capital gains tax, minimum wage increase among new laws taking effect in 2022