The Washington workers’ compensation fund tax in Box 14 of your W-2 is the employee share of the premium your employer withheld for state workers’ comp insurance through the Department of Labor and Industries (L&I). The IRS treats it as a deductible state tax, and if you itemize, it goes on Schedule A, line 5a, alongside any state and local income taxes.1Internal Revenue Service. Instructions for Schedule A (Form 1040) (2025)
What the Box 14 Amount Represents
Washington runs a state-monopoly workers’ compensation system. Nearly all employers must buy coverage through L&I or qualify as certified self-insurers.2Lni.wa.gov. Do I Need a Workers’ Comp Account? Both employers and employees pay into it, with premiums based on hours worked and the risk class of the job.3Lni.wa.gov. Calculating Premium Rates Workers cover roughly 24% of the total premium on average.4Lni.wa.gov. L&I Adopts 4.9% Average Increase in Workers’ Comp Rate for 2026
For 2026, the average combined rate is about $1.50 per $100 of payroll before retro refunds, which puts the employee share around $0.36 per $100 of wages. On a $60,000 salary, that comes to roughly $216 a year. Higher-risk classifications pay more and lower-risk ones pay less, so the figure in your Box 14 can vary widely from one job to another.
If your employer is self-insured, your contribution funds the Supplemental Pension Fund (employers can withhold half of that rate from your wages) and the Pay During Appeal Overpayment Fund.5Lni.wa.gov. Employers’ Guide to Self-Insurance in Washington State The same federal tax treatment applies.
How to Read the Entry on Your W-2
For tax year 2026, the IRS split the old Box 14 into Box 14a (“Other”) and Box 14b (reserved for tipped occupation codes).6Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3 Your L&I contribution appears in Box 14a with a label your employer chooses. Common ones include “WA WC,” “WA L&I,” and “WASH W/C.” The label itself has no tax significance.
The number next to the label is the total withheld from your paychecks over the calendar year. That is the figure you use on your return. If something looks off, cross-check it against your final pay stub. Employers can correct a Box 14a error with a Form W-2c, but because Box 14a is informational, the IRS tells employers to fix it only on the employee copies, not on the copy filed with the Social Security Administration.6Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
Where It Goes on Schedule A
The deduction belongs on Schedule A, line 5a (“State and Local Income Taxes”), not on any “Other Taxes” line. The IRS Schedule A instructions name the “Washington State Supplemental Workmen’s Compensation Fund” as a mandatory contribution reported on line 5a, alongside similar funds from a handful of other states.1Internal Revenue Service. Instructions for Schedule A (Form 1040) (2025)
IRS Publication 17 carries the same list, which also includes contributions to Alaska, California, New Jersey, and Pennsylvania state unemployment funds, several nonoccupational disability funds, and certain state family leave programs.7Internal Revenue Service. Publication 17 (2025), Your Federal Income Tax If your tax software prompts you to categorize the Box 14a entry, pick the option that routes it to line 5a rather than a generic “other” bucket. Some software defaults send it to the wrong place.
Line 5a feeds into the state and local tax (SALT) limitation. Your L&I contribution combines with property taxes on line 5b and any general sales taxes you choose to deduct on line 5c, and the total is capped.
Does Itemizing Actually Help You
The deduction only matters if your total itemized deductions exceed the standard deduction. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments from the One, Big, Beautiful Bill
A few hundred dollars of L&I premium is not going to push a renter with no mortgage interest and modest charitable giving past $16,100 on its own. In that case you take the standard deduction and the L&I amount gives you no federal benefit. If you already itemize because of a mortgage or substantial property taxes, the L&I figure is additional savings layered on top of what you were already claiming. It reduces taxable income, not adjusted gross income, so it does not affect AGI-based items like student loan interest phase-outs or Roth IRA eligibility.
On the cap itself: the One Big Beautiful Bill Act raised the SALT ceiling from its prior $10,000 level. For 2026, the base cap is $40,000, indexed to about $40,400, or $20,000 if married filing separately.9Internal Revenue Service. Topic No. 503, Deductible Taxes A phase-down begins once modified adjusted gross income exceeds $505,000, but the cap never drops below $10,000. Because Washington has no broad personal income tax, there is no state income tax withholding using up space under the cap, so for most Washington residents the L&I contribution plus property taxes sits well inside the limit.
Don’t Confuse It with Paid Family and Medical Leave
Washington also withholds employee premiums for its Paid Family and Medical Leave (PFML) program, and that amount shows up in Box 14a too. PFML and L&I workers’ comp are separate programs with separate tax rules, and Washington passed legislation in 2026 adjusting how PFML premiums interact with federal employment taxes after new IRS guidance on state-run paid leave programs.10Employment Security Department Washington State. New Law Addresses IRS Guidance on State’s Paid Family and Medical Leave Program The two should have different labels in Box 14a. Make sure you’re entering the L&I figure, not the PFML figure, on Schedule A line 5a.
Benefits You Receive Are Treated Differently
The premiums you pay in are deductible; the benefits you collect if you’re injured generally are not taxable. Federal law excludes workers’ compensation payments for workplace injury or occupational illness from gross income. You typically won’t get a 1099 for these benefits and don’t report them on your federal return. One wrinkle: if you also receive Social Security disability benefits, part of those Social Security payments may become taxable when combined with workers’ comp.
If you deducted your L&I contributions in a prior year and later receive a premium refund from L&I, that refund can be taxable in the year you receive it under the tax benefit rule. If the refund relates to a year when you took the standard deduction, you owe nothing extra, because the original payment never produced a federal benefit.