Voluntary Contribution Program

How it works

Want to reduce your tax rate? The Voluntary Contribution Program allows you to reimburse the unemployment insurance trust fund for unemployment benefits. In exchange, we will subtract those benefit charges from your experience rating account.

You make a one-time payment – for either part or all of the unemployment benefits paid to former (or current) employees during the past two fiscal years. We subtract those benefit charges from your account, which reduces your tax rate for the current tax period.

What’s new through 2025

Recent legislation – ESSB 5061 – may make the Voluntary Contribution Program more appealing to your company’s bottom line:

You no longer need to pay the 10% surcharge fee that we normally charge to use the program.
The program is open to employers who are moving 8 rate classes or more rather than 12 or more.
Employers can buy down a minimum of 2 rate classes instead of 4.

You can lower your tax rate

In 1995, Washington adopted a “voluntary contribution” provision in state law explicitly for helping small businesses seeing large increases in their experience rate.

In the first quarter each year, we mail (by U.S. Postal Service) a program notice and application to eligible employers. To be eligible, employers:

Must be taxable.
Must not be a local government.
Cannot currently have a delinquent tax rate.
Must have an account rate class increasing by at least 12 (8 for 2021-2025) rate classes from the previous calendar year’s tax rate run.

Details about the program

The amount you pay (excluding the surcharge) will reduce the unemployment benefit charges we use for calculating your tax rate for this year and future years.

Participation is voluntary.
Qualified employers will automatically receive a mailed a notice and application.
Minimum buy-down is 2 rate classes for tax years 2021–2025.

How to participate

Employers who would like to participate should complete the Voluntary Contribution Program application and return it with their exact payment (shown in "Benefit charge contribution") by the date required on the application. Applications must be postmarked no later than March 31.

In return, we will mail you a tax rate notice confirming your new tax rate, or you can view it online in the Employer Account Management Services (EAMS).

Cost vs. benefit

Program costs and benefits are unique to each employer. In general, the Voluntary Contribution Program:

May help if an employer:

Anticipates taxable payroll will grow or be stable over the next 4 years.

May not help if an employer:

Anticipates another large spike in benefit charges.
Expects a large drop in taxable payroll.
Thinks they will close their business in the next 4 years.

The program can be valuable for many employers but doesn't make sense in every scenario. The following examples show how the program can affect employers in different circumstances.

Example A

Business has:

Consistent annual taxable payroll of $500,000 every year.

The business had $0 in benefit charges before 2020, placing it in rate class 1 with a 0% experience tax rate.

The business incurs $80,000 in benefit charges in 2020.

Without offsetting their benefit charges, they move to rate class 33 and their bill looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	4.25%	$21,500
2022	$500,000	4.25%	$21,500
2023	$500,000	4.25%	$21,500
2024	$500,000	4.25%	$21,500
Total			$85,000

If company pays $7,502, the minimum to drop 3 classes to rate class 30, it looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	3.63%	$18,500
2022	$500,000	3.63%	$18,500
2023	$500,000	3.63%	$18,500
2024	$500,000	3.63%	$18,500
Voluntary Contribution			$7,502
Total			$80,102

They would have paid a total of $85,000 in taxes over 4years, but by paying $7,502 to offset some benefit charges, they saved $4,898.

Example B

Business has:

Consistent annual taxable payroll of $500,000 every year.

The business had $0 in benefit charges before 2020, placing it in rate class 1 with a 0% experience tax rate.

The business incurs $76,000 in benefit charges in 2020.

Without offsetting their benefit charges, they move to rate class 32. Their bill looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	4.00%	$20,000
2022	$500,000	4.00%	$20,000
2023	$500,000	4.00%	$20,000
2024	$500,000	4.00%	$20,000
Total			$80,000

If company pays $76,000 to offset benefit charges, moving back to rate class 1, it looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	0.00%	$0
2022	$500,000	0.00%	$0
2023	$500,000	0.00%	$0
2024	$500,000	0.00%	$0
Voluntary Contribution			$76,000
Total			$76,000

They would have paid a total of $80,000 in taxes over 4 years, but by paying $76,000 to offset the benefit charges, they saved $4,000.

Example C

Business has:

Consistent annual taxable payroll of $500,000 every year.

The business had $0 in benefit charges before 2020, placing it in rate class 1 with a 0% experience tax rate.

The business incurs $58,000 in benefit charges in 2020 AND then $15,000 in 2021.

Without offsetting their benefit charges, they move to rate class 25, then 31, then 8 and their bill looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	3.00%	$15,000
2022	$500,000	3.75%	$18,750
2023	$500,000	3.75%	$18,750
2024	$500,000	3.75%	$18,750
2025	$500,000	0.76%	$3,800
Total			$75,050

If company pays $58,000 to offset benefit charges, it moves only to rate class 8 and it looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	0.00%	$0
2022	$500,000	0.76%	$3,800
2023	$500,000	0.76%	$3,800
2024	$500,000	0.76%	$3,800
2025	$500,000	0.76%	$3,800
Voluntary Contribution			$58,000
Total			$73,200

They would have paid a total of $75,050 in taxes over 5 years, but by paying $58,000 to offset the benefit charges, they saved $1,850.

Example D

Business has:

Consistent annual taxable payroll of $500,000 every year.

The business had $0 in benefit charges before 2020, placing it in rate class 1 with a 0% experience tax rate.

The business incurs $68,000 in benefit charges in 2020 AND then $68,000 in 2021.

Without offsetting their benefit charges, they move to rate class 29, then 40 then back to 29, their bill looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	3.50%	$17,500
2022	$500,000	5.40%	$27,000
2023	$500,000	5.40%	$27,000
2024	$500,000	5.40%	$27,000
2025	$500,000	3.50%	$17,500
Total			$116,000

If company pays $68,000 to offset benefit charges, moving to rate class 29, but then has charges the next year, it looks like this:

	Taxable Payroll	Experience Rate	Tax Due
2021	$500,000	0.00%	$0
2022	$500,000	3.50%	$17,500
2023	$500,000	3.50%	$17,500
2024	$500,000	3.50%	$17,500
2025	$500,000	3.50%	$17,500
Voluntary Contribution			$68,000
Total			$138,000

They would have paid a total of $116,000 in taxes over 5 years, but by paying $68,000 to offset the benefit charges but then having more the next year, it cost them $22,000 more.