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SOCIAL HOUSING TAX

SEA-MC tit. 5, subtit. II, ch. 5.37
in effect

Seattle Mun. Code § 5.37.000 Purpose

5.37.000 - Purpose On February 14, 2023, Seattle voters approved Initiative 135 by a 14-point margin. I-135 created the Seattle Social Housing Developer to develop, own, and maintain social housing developments in the City of Seattle and for all related lawful purposes or public functions within the limits of the City of Seattle and outside of the City to the extent provided by state law. Social housing is available to all, permanently affordable, and publicly owned in perpetuity. Social housing will increase the supply of permanent, truly affordable housing for Seattle residents. Social housing is an internationally proven model that spans multiple countries and continents, including but not limited to: Maryland's Montgomery County, Toronto, Finland, Singapore, France, Vienna, and New Zealand to name a few. The social housing tax levied through this initiative provides a progressive revenue source that will support the Seattle Social Housing Developer's efforts to expand access to affordable social housing in Seattle by funding the construction and acquisition of social housing, operation costs, maintenance costs, rehabilitation of acquisitions, making control investments in housing developments, and other functions that advance its mission. The housing developed under this ordinance will be permanently protected for public use, dedicated to workforce and community housing, and will thereby increase the supply of permanent, truly affordable housing. The social housing payroll tax will provide a critical, ongoing revenue stream for the Seattle Social Housing Developer to fulfill its mission as outlined in Initiative 135. This revenue stream should eventually complement other sources of funding as the Seattle Social Housing Developer looks to federal grants, State of Washington revenue streams, and other sources to accelerate its ability to build and acquire social housing. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.010 Administrative provisions

5.37.010 - Administrative provisions The provisions contained in Chapter 5.55 shall apply to the taxes imposed in this Chapter except as expressly stated to the contrary herein. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.020 Definitions

5.37.020 - Definitions The definitions applicable to Chapter 5.38, as in effect on January 1, 2024, shall be fully applicable to this Chapter except as may be expressly stated to the contrary herein. The following additional definition shall apply throughout this Chapter 5.37: "Excess compensation" means annual compensation to an employee in excess of $1,000,000. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.030 Determining excess compensation paid in Seattle to employees

5.37.030. - Determining excess compensation paid in Seattle to employees For employees who receive excess compensation, the taxpayer shall determine the amount of excess compensation subject to the tax levied in this Chapter by calculating the portion of such excess compensation paid in Seattle using the method for making such determination with respect to compensation under Section 5.38.025, as in effect on January 1, 2024. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.040 Tax Imposed—Rate

5.37.040 - Tax Imposed—Rate A. An excess compensation payroll expense tax is hereby levied upon and shall be collected from persons engaging in business within Seattle. B. The amount of tax due shall be 5% of the excess compensation paid in Seattle for each employee of the taxpayer. C. The tax imposed by this Chapter is levied on businesses. A business may not make any deductions from the employees' compensation to pay for this tax. D. The tax imposed by this Chapter is in addition to the payroll expense tax levied under Chapter 5.38. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.050 Exemptions from the tax

5.37.050 - Exemptions from the tax A. The following are exempt from the tax imposed by this Chapter: 1. Any individual who is an independent contractor for purposes of the business license tax under subsection 5.45.090.S and whose excess compensation is included in the tax paid by another business pursuant to Section 5.37.040. 2. Businesses that are preempted from taxation by cities pursuant to federal or state statutes or regulations, including the businesses identified in subsection 5.38.040.A.4, as in effect on January 1, 2024. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.060 Allocation and apportionment

5.37.060 - Allocation and apportionment The provisions of Section 5.38.050, as in effect on January 1, 2024, shall have full force and application with respect to the tax imposed in this Chapter. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.070 Allocation of proceeds

5.37.070 - Allocation of proceeds A. All revenue received through the tax levied in this Chapter shall be allocated as follows: 1. At least 95% of the tax revenue shall be allocated and promptly transferred to Seattle's Social Housing Developer, the Public Development Authority established by Initiative 135. 2. Up to 5% of the tax revenue may be allocated to administer the tax, but in no event shall the amount so allocated exceed $2,000,000 per year. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.080 When due

5.37.080 - When due A. The tax imposed by this Chapter shall take effect as of January 1, 2025, and shall be due and payable in quarterly installments in accordance with Section 5.55.040. B. The Director may use discretion to assign businesses to an annual reporting period. Forms for such filings shall be prescribed by the Director. Persons discontinuing their business activities in Seattle shall report and pay the excess compensation payroll expense tax at the same time as they file their final business license tax return under Chapter 5.45. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.090 Tax in addition to other license fees or taxes

5.37.090 - Tax in addition to other license fees or taxes The tax imposed herein shall be in addition to any license fee or tax imposed or levied under any other law, statute, or ordinance, whether imposed or levied by the City, the State, or other governmental entity or political subdivision. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.100 Tax part of operating overhead

5.37.100 - Tax part of operating overhead It is not the intention of this Chapter that the taxes herein levied upon persons engaging in business be construed as taxes upon the customers of such businesses, but that taxes shall be levied upon, and collectible from, the person engaging in the business activities herein designated and that such taxes or fees shall constitute a part of the operating overhead or cost of doing business of such persons. (Ord. I-137, § 1, 2025.)

Seattle Mun. Code § 5.37.110 Rules and regulations

5.37.110 - Rules and regulations The Director shall adopt, publish, and enforce rules and regulations not inconsistent with this Chapter for the purpose of carrying out the provisions of this Chapter, including but not limited to rules to ensure that businesses subject to both the payroll expense tax under Chapter 5.38 and the tax under this Chapter are able to streamline and consolidate their filings for those taxes. (Ord. I-137, § 1, 2025.)
Source: City of Seattle, Seattle Municipal Code and City Charter (Municode Library, library.municode.com)URL: https://library.municode.com/wa/seattle/codes/municipal_code?nodeId=TIT5REFITA_SUBTITLE_IITA_CH5.37SOHOTAFetched: 11/1/2026

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