Countdown to Long-Term Care Tax Collection – Beginning July 1, 2023, the Long-Term Care (LTC) payroll tax goes into effect after an 18-month delay. Employers will be required to withhold 58 cents of every $100 an employee earns in their paycheck.
This is an employee-paid tax. If an employer doesn’t collect these funds from the employee, then the employer is responsible for paying the tax. An employer will collect and submit the tax to the Employment Security Department (ESD) the same way they do for paid leave. Just a reminder that, unlike the Paid Family Medical Leave tax, there is no cap on the taxable amount paid into the LTC fund.
Since the original bill was passed, the Legislature has added to the list of exemptions that do not have to pay the tax. Click here to learn more about the exemptions. If an employee previously provided their employer with an exemption letter from ESD, the employer should have retained that letter.
It is the employee’s responsibility to inform the employer of any changes in their exemption status and to provide their employer with their letter from ESD. Employers are required to keep a copy of any employee’s letter from ESD approving their exemption.
NOTE: The Employment Security Department will host a Zoom webinar — Long Term Care Tax: What Businesses Need to Know — on May 18 from 12:00-1:00 to provide the latest updates on the state’s long-term care insurance program and discuss what employer responsibilities are in regard to collecting the tax. They’ll cover who contributes to the fund, who can get an exemption, how workers will meet contribution requirements and what kinds of benefits will be available. They will answer employer questions and let you know where to find more information for businesses and workers. Click here to register.