How much does an employer pay for unemployment - Washington ESD rates?
I'm starting a small business in Washington and trying to figure out my unemployment insurance costs. I know employers have to pay into the Washington ESD system but I can't find clear info on the actual rates. Does anyone know how much employers pay per employee for unemployment insurance? Is it a percentage of wages or a flat fee? I've been through the Washington ESD website but it's confusing with all the different rate schedules.
55 comments
Join the conversation
Ethan Brown
Washington employers pay unemployment insurance tax based on your experience rating and payroll. New employers typically start at around 2.7% of the first $62,500 in wages per employee for 2025. Your rate can go up or down based on how many former employees file claims.
0 coins
CosmicCrusader
•So if I have one employee making $50k, I'd pay about $1,350 per year in unemployment taxes?
0 coins
Ethan Brown
•That's about right for a new employer rate. The exact amount depends on your assigned rate class when you register with Washington ESD.
0 coins
Yuki Yamamoto
The rates change every year and depend on your industry too. Construction companies usually pay higher rates than office businesses. You'll get a rate notice from Washington ESD after you register. There's also a small Social Cost factor that all employers pay on top of the experience rate.
0 coins
CosmicCrusader
•What's the Social Cost factor? Is that like an administrative fee?
0 coins
Yuki Yamamoto
•It covers benefits for unemployed workers whose former employers are no longer in business or didn't pay enough taxes. It's usually around 0.02% but varies.
0 coins
Carmen Ortiz
•I had trouble getting through to Washington ESD when I first registered my business. Spent hours on hold trying to get rate information. Finally used claimyr.com to actually talk to someone - they have a video demo at https://youtu.be/7DieNd3C7zQ that shows how it works.
0 coins
Andre Rousseau
been running my business for 8 years and my rate has gone down to like 0.5% because none of my employees have filed claims. if you have good retention your rates will drop over time
0 coins
CosmicCrusader
•That's encouraging! How long did it take to get to the lower rate?
0 coins
Andre Rousseau
•took about 3-4 years of no claims to see significant drops. washington esd looks at your claims history over multiple years
0 coins
Zoe Papadakis
You also need to factor in administrative costs. Washington ESD charges quarterly reporting fees and there are penalties if you're late with payments or reports. Make sure you understand all the deadlines when you register.
0 coins
CosmicCrusader
•What kind of penalties are we talking about? I want to make sure I stay compliant.
0 coins
Zoe Papadakis
•Late payment penalties can be 5-15% of what you owe, plus interest. Late reporting can result in estimated assessments that are usually higher than what you actually owe.
0 coins
Jamal Carter
The wage base increases almost every year too. It was like $56,000 a few years ago and now it's $62,500 for 2025. So even if your rate stays the same, you might pay more on higher-earning employees.
0 coins
CosmicCrusader
•Good point - so there's a cap on how much of each employee's wages get taxed?
0 coins
Jamal Carter
•Right, you only pay unemployment tax on the first $62,500 of each employee's annual wages. Anything above that is exempt.
0 coins
Ethan Brown
•The wage base is adjusted annually based on average wages in Washington state. It's one of the higher wage bases in the country.
0 coins
AstroAdventurer
Don't forget you'll also pay into the Family and Medical Leave program if you have employees. That's separate from unemployment insurance but collected by Washington ESD. It's currently around 0.6% split between employer and employee.
0 coins
CosmicCrusader
•Oh great, another payroll tax I didn't know about. Is that on the same wage base?
0 coins
AstroAdventurer
•No, the PFML wage base is much higher - around $162,000 for 2025. But you only pay the employer portion which is about 0.2% of wages.
0 coins
Carmen Ortiz
When I was setting up payroll, I couldn't get clear answers from Washington ESD about rate calculations. Their phone system is terrible - kept getting disconnected after waiting 45+ minutes. That's when I found Claimyr - they actually got me through to a real person who explained everything.
0 coins
Mei Liu
•How does that service work? I'm getting frustrated with trying to reach anyone at Washington ESD.
0 coins
Carmen Ortiz
•You give them your info and they handle the calling for you. Way easier than sitting on hold for hours. Check out their demo video to see how it works.
0 coins
Liam O'Sullivan
Your accountant should be able to help you estimate these costs when setting up payroll. Most payroll services also calculate unemployment taxes automatically once you're registered with Washington ESD.
0 coins
CosmicCrusader
•I'm trying to do this myself to save money starting out. Is it complicated to file the quarterly reports?
0 coins
Liam O'Sullivan
•It's not too bad if you keep good records. Washington ESD has online filing through their business portal. Just make sure you report wages and pay taxes on time.
0 coins
Amara Chukwu
Industry matters a lot for rates. I'm in landscaping and pay way more than my friend who runs a consulting business. Construction, temp services, and seasonal businesses typically get hit with higher rates.
0 coins
CosmicCrusader
•I'm starting a tech consulting business, so hopefully I'll be in a lower rate category.
0 coins
Amara Chukwu
•Yeah you should be good. Tech and professional services usually have low claim rates so they get better experience ratings.
0 coins
Giovanni Conti
•What industry code do you use for tech consulting? I wasn't sure when I registered.
0 coins
Fatima Al-Hashimi
Budget for about 3% of your total payroll for unemployment insurance when you're starting out. That gives you some cushion for rate increases and covers most new employer scenarios in Washington.
0 coins
CosmicCrusader
•That's helpful for planning purposes. Better to overestimate than get surprised by a big tax bill.
0 coins
Fatima Al-Hashimi
•Exactly. You can always adjust your estimates once you get your official rate notice from Washington ESD.
0 coins
NeonNova
make sure you register as soon as you hire your first employee or even before. washington esd can backdate your liability if you wait too long and that gets expensive fast
0 coins
CosmicCrusader
•How far back can they go? I haven't hired anyone yet but want to be prepared.
0 coins
NeonNova
•they can go back to when you should have registered. better to register early than deal with penalties and back taxes later
0 coins
Dylan Campbell
The rates also depend on the overall health of the unemployment trust fund. When lots of people are collecting benefits, rates go up across the board. We saw this during COVID when everyone was filing claims.
0 coins
CosmicCrusader
•Are rates still elevated from the pandemic or have they normalized?
0 coins
Dylan Campbell
•They've come down from the peak but are still higher than pre-pandemic levels. The trust fund is rebuilding but it takes time.
0 coins
Sofia Hernandez
•My rate went from 0.8% before COVID to over 2% now. Still waiting for it to come back down as the fund recovers.
0 coins
Dmitry Kuznetsov
Pro tip: if you're planning to hire contractors vs employees, that affects your unemployment insurance costs. True independent contractors don't count toward your UI taxes, but misclassifying employees as contractors can get you in trouble with Washington ESD.
0 coins
CosmicCrusader
•Good point. I'm planning to use some contractors initially. What's the test for employee vs contractor in Washington?
0 coins
Dmitry Kuznetsov
•Washington has pretty strict tests - if you control how, when, and where the work gets done, they're probably an employee. Washington ESD audits this stuff regularly.
0 coins
Ava Thompson
One more thing - if you have employees in multiple states, you might need to pay unemployment insurance in each state where they work. Washington has reciprocal agreements with some states but not others.
0 coins
CosmicCrusader
•I'm only planning to operate in Washington for now, but good to know for future expansion.
0 coins
Ava Thompson
•Yeah, multi-state payroll gets complicated fast. Stick with Washington only until you're established.
0 coins
Miguel Ramos
When I was getting my business set up I had so many questions about rates and registration. Washington ESD's website has the info but it's buried in PDFs and rate schedules. Had to call multiple times to understand everything. Claimyr.com actually helped me get through to someone who could walk through the calculations. Way better than sitting on hold forever.
0 coins
CosmicCrusader
•I'll definitely check that out if I can't get through to Washington ESD directly. Thanks for the recommendation!
0 coins
Miguel Ramos
•No problem! The video demo shows exactly how it works - basically they handle all the calling hassle for you.
0 coins
Zainab Ibrahim
Don't forget to factor these costs into your pricing if you're billing clients. Unemployment insurance is a real business expense that affects your bottom line, especially when you're starting out and paying new employer rates.
0 coins
CosmicCrusader
•Absolutely. I'm trying to get all these hidden costs mapped out before I set my rates.
0 coins
Zainab Ibrahim
•Smart approach. Better to price properly from the start than try to raise rates later to cover unexpected taxes.
0 coins
Ethan Brown
•Also remember that unemployment tax is deductible as a business expense, so factor that into your tax planning too.
0 coins
Sophie Hernandez
Just wanted to add that you should also consider setting aside money monthly for these taxes rather than scrambling when quarterly payments are due. I learned this the hard way - put away about 3% of each paycheck into a separate account for unemployment taxes, workers comp, and other payroll obligations. Makes cash flow much smoother when those bills come due every quarter.
0 coins
Beatrice Marshall
•That's really smart advice! I was just thinking about how to handle the cash flow aspect. Setting aside 3% monthly sounds much more manageable than getting hit with a big quarterly bill. Do you recommend a separate business savings account specifically for payroll taxes, or just track it within your main business account?
0 coins