State guide · Washington · 2026 rules

S corporation in Washington: what the election changes

In Washington the S-corp decision is almost all federal. The state adds no tax on your salary, and the federal unemployment tax runs at its full rate.

Updated October 24, 20269 official sources

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You’ll need: last year’s Schedule C (line 31) and the W-2 from any job you also hold. Everything else starts at a typical value you can change.

State where the business is Each state treats the election differently. The check shows only the questions that matter there.

Net profit for the year, before paying yourself Your business's profit after expenses. Money you take out for yourself does not lower it.

Where do I find this?

Schedule C, line 31 (“Net profit or (loss)”) on last year’s return.

For this year: sales minus business expenses so far, scaled to a full year. Owner draws are not an expense.

Salary you would pay yourself as an S corporation What you would pay yourself through payroll. The IRS expects a reasonable salary for the work you do.

Where do I find this?

No form shows this yet: you choose it. It should be about what you would pay someone else to do your work.

The salary finder just below shows what employees in your job earn in your state or metro area. What the IRS looks at.

Salary finder: what people in your job earn (BLS)

Your job Pick the job closest to what you do most of the week.

Area Pick your metro area if it is listed. Pay varies by area.

Another job I also earn W-2 wages from a job outside this business

Typical values: change them if you know yours

Payroll service, per year typical value Published one-person prices: $492 to $684 a year (October 2026).

Where do I find this?

Your payroll provider’s price page or quote, for one employee: you. Published prices compared.

Extra tax-prep cost for the S-corp return typical value A survey average: the fee for Form 1120-S minus the fee for Schedule C (2020 fees).

Where do I find this?

Ask your preparer what a Form 1120-S (the S corporation’s own return) would cost, then subtract what you pay now for Schedule C.

Your top federal income tax rate Not sure? Keep 22%. It changes line 5 only.

Where do I find this?

Your taxable income is on Form 1040, line 15. Find the rate for that income and your filing status in the IRS rates and brackets table.

Filing status Changes the result only above $200,000 of earnings ($250,000 if married filing jointly, $125,000 if married filing separately).

Where do I find this?

The box checked under Filing Status at the top of your Form 1040.

Choose a state and enter your profit and salary to see the comparison.

The state

Washington has no individual or corporate income tax in 2026. The business and occupation (B&O) tax is a tax on gross receipts. It applies the same way to a sole proprietorship, an LLC and an S corporation, so the election does not change it.

An LLC that elects stays an LLC with the Secretary of State. Its annual report and business license renewal do not change.

A new 9.9% income tax on adjusted gross income over $1 million starts January 1, 2028.

Payroll taxes on your salary

Unemployment insurance does not cover the member of an LLC, and the federal election does not change that. An LLC member also cannot choose voluntary coverage. So Washington charges no unemployment tax on your salary, before or after the election.

Without state coverage there is no state credit against the federal unemployment tax. The S corporation pays the full 6.0% on the first $7,000 of your salary.

Paid Family & Medical Leave and the WA Cares long-term care fund treat an LLC member as self-employed. You pay neither premium unless you opt in.

If you incorporate instead of using an LLC, the rules differ. A corporate officer is outside unemployment insurance by default but is an employee for Paid Leave (1.13% of wages in 2026) and WA Cares (0.58%).

Worked examples

A single-member LLC owner, single filer, 22% federal bracket, default payroll and return costs. The figure is total tax and added costs as an S corporation compared with staying as you are.

Profit / salary	Statewide
$80,000 / $45,000	$623 lower
$120,000 / $60,000	$3,025 lower
$200,000 / $90,000	$7,805 lower

Starting payroll in Washington

There is no state income tax withholding, and your own salary needs no Washington payroll account. When you hire employees, add the employment endorsement to your business license through the Washington Department of Revenue; that registers you with the Employment Security Department.

New hire paperwork for Washington

Other states

All state guides and the map

Sources

Federal figures: IRS Publication 15 (2026), Schedule SE and Form 2553 instructions. Every figure was read on an official page and checked a second time. Checked October 24, 2026. How we check facts.

An estimate from public rules, not tax advice.

Ready to elect? See the Form 2553 steps.

Electing S corp status