What Is the WAL Code in Box 14 of Your W-2?

Box 14 on your Form W-2 is used by employers to report various items that do not have a dedicated spot elsewhere on the form. If you are a Washington employee and see the code “WAL,” it refers to a specific state-mandated program. This article explains what this code represents and its impact on your tax situation.

What “WAL” in Box 14 Represents

The “WAL” description, or a similar variation like “WA Cares LTC,” signifies premiums paid for the Washington Long-Term Care program, officially known as the WA Cares Fund. This is a state-run social insurance program designed to provide residents with access to long-term care benefits. The amount shown in Box 14 reflects the total premiums your employer withheld from your paychecks during the tax year.

Participation in the program is mandatory for most W-2 employees in the state. The premium rate is 0.58% of gross earnings, and unlike Social Security taxes, there is no income cap on this withholding. Therefore, all of your wages are subject to this premium, which is collected by your employer and remitted to the state.

Employers have some discretion in how they label these deductions. While “WAL” is a common abbreviation, you might see other descriptions. This amount represents your personal contribution to this state-specific long-term care trust and is reported on your W-2 for informational purposes.

Tax Treatment of These Contributions

These premiums are withheld from your paycheck after federal taxes have been calculated, meaning they are post-tax deductions. For federal income tax purposes, the IRS has clarified that mandatory contributions to state-run Paid Family and Medical Leave (PFML) funds can be treated as state income taxes. However, the WA Cares Fund is a long-term care program, and the IRS has not issued specific guidance confirming that its contributions qualify for the same treatment.

Treating WA Cares payments as a state income tax for an itemized deduction on Schedule A is an interpretation and not based on explicit IRS guidance for this specific program. If you do include these payments, you must itemize your deductions. Furthermore, the federal State and Local Tax (SALT) deduction is capped at $10,000 per household, per year. This cap includes property taxes, state income or sales taxes, and potentially these WA Cares premiums, so if your combined taxes already exceed $10,000, you will not receive any additional federal tax benefit. Because Washington does not have a state personal income tax, there is no corresponding deduction to be claimed on a state return.

Understanding the WA Cares Fund Exemption

While the one-time exemption for having a private long-term care insurance policy before November 1, 2021, is no longer open for applications, other exemptions are available. Workers may apply for an exemption if they:

• Live outside of Washington
• Are the spouse of an active-duty military member
• Hold a non-immigrant work visa
• Are a veteran with a service-connected disability rating of 70% or higher

With the exception of the permanent veteran exemption, these exemptions are conditional and only valid as long as you meet the specific circumstances. An approved exemption from the state’s Employment Security Department (ESD) means your employer should not be withholding the 0.58% premium from your wages.

If you have an approved exemption but still see “WAL” deductions on your W-2, it indicates a payroll error. It is the employee’s responsibility to provide their employer with a copy of the official exemption approval letter from the ESD. Once notified, the employer is required to cease withholding, and you should contact your employer’s human resources or payroll department to correct the error for future pay periods.