Outlook for Federal and State Unemployment Insurance Tax Rates in 2025 and Beyond

Last updated: December 6, 2024

As state workforce agencies emerge from the financial stress caused by the COVID-19 pandemic, it is prudent for employers to monitor how this stress might impact their federal (FUTA) and state unemployment insurance (SUI) tax rates.  This regularly updated resource is intended to help provide employers insights into the condition of the unemployment insurance financing system and the potential impact to rates in 2025 and beyond.   

FUTA Credit Reductions

Before addressing the condition of the SUI financing system, 2024 tax rates under the Federal Unemployment Tax Act (FUTA) are top of mind for employers as well. 

The U.S. Department of Labor issued its final analysis of FUTA credit reductions for 2024.  Four jurisdictions faced a potential FUTA credit reduction in 2024. However, one of these jurisdictions (Connecticut) repaid their outstanding advances before November 10, 2024, thereby avoiding a FUTA credit reduction. Two jurisdictions (California and New York) had an outstanding advance on each January 1 from 2021 through 2024, and did not repay all their advances before November 10, 2024. Therefore employers in these states face a 0.9% credit reduction, resulting in a net FUTA rate of 1.5%. The U.S. Virgin Islands had an outstanding advance on each January 1 from 2010 through 2024, and did not repay all outstanding advances before November 10, 2024. The U.S. Virgin Islands applied for a waiver of the fifth year (BCR) add-on and was determined to be eligible for the waiver, therefore employers in the U.S. Virgin Islands will face a 4.2% credit reduction, resulting in a net FUTA rate of 4.8%.¹ Net 2024 FUTA tax rates (including a FUTA credit reduction) can be summarized as follows:

• California:        From 1.20% in 2023 to 1.50% in 2024
• New York:      From 1.20% in 2023 to 1.50% in 2024
• Virgin Islands:      From 4.50% in 2023 to 4.80% in 2024

Advances to State Unemployment Trust Funds²  
(Title XII of the Social Security Act)

The California Legislative Analyst’s Office (a nonpartisan office that provides fiscal and policy information and advice to the Legislature) issued a report titled “Fixing Unemployment Insurance” in December of 2024.  The Executive Summary states:

The State’s Unemployment Insurance (UI) Financing System Is Broken. The state’s UI program is supposed to be self-sufficient—that is, the system should collect enough funds to pay for benefits over time. This means, in some years, the system will collect more than necessary so that, during most economic downturns, there is enough money to pay for rising benefit costs. That system is broken: tax collections routinely fall short of covering benefit costs. (The state’s fiscal problems are unrelated to the widespread fraud that affected temporary federal UI programs during the pandemic.)  Both our office and the administration expect these annual shortfalls to continue for the foreseeable future. Under our projections, deficits would average around $2 billion per year for the next five years. This outlook is unprecedented: although the state has, in the past, failed to build robust reserves during periods of economic growth, it has never before run persistent deficits during one of these periods.

• Mounting Consequences of the State’s Broken UI Financing System. The state’s broken UI system now presents mounting consequences:
  • Annual Shortfalls Will Balloon Outstanding Federal UI Loan. Anticipated annual shortfalls will add to the state’s looming $20 billion outstanding federal UI loan. We expect the loan to grow by billions of dollars before federal surcharge UI taxes are high enough for the state and employers to begin making progress toward repaying the loan.
  • Loans Will Become a Permanent Feature of UI and a Major Ongoing Taxpayer Cost. The state will need to borrow from the federal government in most years to make up the gap between UI benefits and contributions. This means that businesses could face a perpetually outstanding federal loan, on which the state must make interest payments. These interest costs will be significant, likely around $1 billion per year, and paid by the state’s taxpayers.
  • UI Program Will Be Unable to Build Reserves Ahead of Next Recession. Although a federal surcharge on businesses will help repay the federal loan, the surcharge cannot help the state build reserves after the loan is repaid. This is because the surcharge turns off once the loan balance reaches zero. Absent the federal surcharge, little or no reserves would be on hand at the start of the next recession, further increasing the state’s reliance on costly federal loans.
• Broken Financing System Also Undermines Key Objectives of the UI Program. The state’s UI system faces other problems, too. First, state UI benefits cannot keep up with inflation or provide the intended wage replacement of half of workers’ wages. Second, the state’s approach to setting employer tax rates (a system called “experience rating”) has the effect of depressing take-up of UI benefits among eligible, unemployed workers. Third, the state’s lowest-in-the-nation taxable wage base deters employers from hiring lower-wage workers. In each case, our proposed fixes to the UI financing system would eliminate, or at least mitigate, these related shortcomings.
• Four Recommendations to Fix the System. The state’s UI tax system requires a full redesign so that contributions: (1) cover benefit costs in most years and (2) build up a reserve that can be drawn down during recessions. We recommend four main areas of change:
  • Substantially Increase the Taxable Wage Base. We recommend the Legislature increase the taxable wage base from $7,000 to $46,800, tying the taxable wage base to the amount of UI benefits a worker can actually receive ($450 per week). Taxing this level of earnings means no taxes would be paid on wages that are not covered by UI.  This taxable wage base level would place California among the ten states with taxable wages bases above $40,000 and all other Western states. While necessary, this step alone would not be sufficient to address the state’s solvency problems.
  • Redesign Employer Tax Rates Using Standard Rate and Reserve-Building Rate. Following federal guidelines, we recommend the state adopt a simple, robust UI tax structure comprised of a standard tax rate and a reserve-building tax rate. The standard tax rate would cover typical UI benefit costs. The reserve-building rate would help the state build up a robust reserve that can be drawn down during recessions. Under current conditions, the standard tax rate would be 1.4 percent and the reserve-building rate would be 0.5 percent, for a total of 1.9 percent UI tax rate applied to our proposed $46,800 taxable wage base.
  • Transition to Experience Rating System with Fewer Downsides. We recommend the Legislature transition to a new experience rating system that bases employers’ tax rates on increases or decreases in their employment, rather than an exact accounting of their former workers’ UI costs (as the current system operates). This approach would continue to reflect, indirectly, employers’ costs to the UI system because businesses that reduce employment tend to have higher UI usage. Thus, this alternative approach maintains the policy goals of experience rating but does not suffer from the main downsides of the current system.
  • Refinance the Federal Loan With Shared Participation Between Businesses and the State. The outstanding federal loan complicates the state’s efforts to fix its broken UI financing system: as long as the federal loan remains outstanding, even an improved tax system would probably not be able to build reserves ahead of the next recession. To address this, and in acknowledgment of the unique nature of the pandemic that caused the significant UI loan, we outline a shared approach to refinancing the federal loan. This would involve two equal parts: (1) a revenue bond paid back by employers and (2) new borrowing from the Pooled Money Investment Account paid back by the General Fund.
• Our Approach Could Still Involve Loans, but They Would Be Smaller and Less Frequent. Our approach would help the state build reserves ahead of recessions, but does not represent an overly cautious tax system designed to avoid federal loans at all costs. If the state adopted our approach, there would be some years that California would run out of reserves during a recession and require a loan from the federal government. Yet these loans would be smaller and less frequent. For example, if California had entered the pandemic with equivalently sized reserves, it still would have required a federal loan, but that loan would have reached $9 billion, rather than $20 billion. As a result, our approach represents a significant improvement over the status quo, which likely involves near-permanent outstanding federal loans for decades to come.
• Magnitude of Tax Increase and New Borrowing an Honest Reflection of UI Program’s Imbalance. The scope and magnitude of our recommendations reflect the deep problems in the existing UI system. These include: (1) the staggeringly large and growing loan from the federal government and (2) the fact that the system is currently running a deficit even during an economic expansion. These are significant problems in isolation, let alone in combination. The significant changes proposed in this report are an honest reflection of these problems. However, whether or not the Legislature takes action, employers will soon pay more in UI taxes than they do today due to escalating charges under federal law. Making changes now will allow the Legislature to make strategic choices about how to repay the federal loan, while also replacing the UI financing system with one that is simpler, balanced, and flexible.
   

Solvency of the SUI Financing System

The Average High Cost Multiple (AHCM) is a standard measure of the solvency of the SUI financing system using a primary factor, a state’s trust fund balance at a point in time.  State trust funds are used to pay unemployment benefits.  An AHCM multiple of 1.00 indicates a state trust fund is deemed sufficiently solvent and able to pay one year of benefits associated with an average recessionary period.  As of January 1, 2024, 34 states were not considered adequately funded under this measure, compared to 37 as of January 1, 2023.³

Average High Cost Multiple (AHCM)
(as of January 1, 2024)

State Trust Fund Balances

A logical starting point for addressing the outlook for 2025 SUI tax rates is state unemployment trust fund balances; a primary factor in developing SUI tax rates. 
  
As depicted in the following graph, net trust fund balances (trust fund balance net of federal Title XII advances) were negative $39.46 billion at the end of Q1 2011, as a result of the Great Recession, compared to negative $27.12 billion at the end of Q1 2021, as a result of the COVID-19 pandemic (i.e., $12.34 billion more solvent).  By the end of Q1 2022, net trust fund balances rebounded and were positive for the first time since the COVID-19 pandemic.  By the end of Q3 2024, net trust fund balances were positive $45.76 billion.⁴   There is still a long way to go before trust funds are at levels experienced just prior to the COVID-19 pandemic but have reached levels experienced just prior to the Great Recession.

Historical Net Trust Fund Balances⁴ 
(Q1 2007 to Q3 2024)

 

Net trust fund balances were substantially higher pre-COVID than they were pre-Great Recession. Because of this and other factors (e.g., the COVID pandemic did not last as long as the Great Recession), net trust fund balances did not reach the negative levels experienced during the Great Recession.

The following graph illustrates net trust fund balances by state as of September 30, 2024.⁴ 

Net Trust Fund Balances by State
(descending order by state)

 

Correlation of State Trust Fund Balances to SUI Tax Rates

As state trust funds are depleted during a period of high or increased levels of unemployment, SUI tax rates have historically increased as well.  However, the correlation is not immediate. There is typically a lag between when an economic downturn impacts SUI tax rates. This is because rating calculations typically take into consideration more than just a single year of experience and look back to historical experience in the development of rates.  And since rates are issued annually, a full year can pass before rates are next adjusted.

As illustrated in the below graph, as net trust fund balances began to decline in 2009 as a result of the Great Recession, the average SUI tax rate in the U.S. did not hit its peak until 2012. After that peak, average rates declined for eight consecutive years through 2020. After 2020, average SUI tax rates in the U.S. fluctuated slightly:

• From 2020 to 2021, the average SUI tax rate increased from 1.72% to 1.89% (a 9.9% increase). 
• From 2021 to 2022, the average SUI tax rate decreased from 1.89% to 1.74% (a 7.9% decrease).
• From 2022 to 2023, the average SUI tax rate decreased from 1.74% to 1.66 (a 4.6% decrease). 
• From 2023 to 2024, the average SUI tax rate is expected to remain fairly stable.

Correlation of Historical Average SUI Tax Rates to Net Trust Fund Balances4
(Q4 1998 to Q3 2024)

Annual Taxable Wage Bases

The depletion of state trust funds can have negative implications not only to future SUI tax rates but also the amount of wages subject to those tax rates.  Employers pay SUI tax on wages earned and paid to each employee within a calendar year up to a specified amount, known as the annual taxable wage base. Some states correlate annual taxable wage base adjustments to state trust fund balances. 

• Over the past 15 years (2010 to 2024), taxable wage bases have increased by an average of 2.76% each year.
• During the height of the Great Recession (from 2008 to 2010), the two year average annual increase was 4.8%. 
• From 2020 to 2021, taxable wage bases increased by an average of 2.9%. 
• From 2021 to 2022, taxable wage bases increased by an average of 3.9%.
• From 2022 to 2023, taxable wage bases increased by an average of 3.6%.
• From 2023 to 2024, taxable wage bases increased by an average of 4.3%.

The following table provides historical taxable wage base trends.⁵

Annual SUI Taxable Wage Bases

 

The following table provides 2025 annual taxable wage bases by state (based on best available information):

Annual Taxable Wage Bases (2024 and 2025)

(1) The higher wage base only applies to employers assigned the maximum rate.
A - Actual wage base, assuming no law change.
E - Best estimate, assuming no law change.

State Actions Potentially Impacting 2025 SUI Tax Rates

The following contains examples of actions taken by states that could impact SUI tax rates in 2025 and beyond.  These state summaries are for informational purposes only. Please see the state legislation and related materials for specific guidance.

Alaska Announcement Relating to 2025 Wage Base
Effective January 1, 2025, employers will pay unemployment taxes on the first $51,700 paid to each employee, up from 49,700 in 2024.

Arkansas Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
For 2025, Arkansas contribution rates range from 0.200% to 10.100% (0.225% to 10.125% in 2024) and the new employer rate will be 2.0%, 1.9% plus the administrative assessment (2.025% in 2024).  The administrative assessment fee, which replaced the stabilization rate, is reduced to 0.1% for 2025 (down from 0.125% in 2024).  The taxable wage base remains $7,000.

California Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
Schedule F+, with rates ranging from 1.5% to 5.9% for positive-balance employers (including zero reserve ratio) and 6.2% for all negative-balance employers, continues in effect in California for calendar year 2025. New employers continue to pay 3.4% in 2024 as well. There is also a 0.1% extra Employment Training Tax for positive-balance employers, which is deposited in the Employment and Training Fund. In addition, voluntary contributions are not permitted in 2025. The UI taxable wage base in California for 2025 remains  $7,000.

Colorado Announcement Relating to 2025 Unemployment Tax Rates
The rate tables currently in effect will continue to be in effect in 2025.

New employer rates consist of the beginning rate, the support rate, and the solvency surcharge rate. These combined rates will be as follows for 2025: 3.05% for non-construction (unchanged from 2024), 3.08% for general construction (unchanged from 2024), 8.055% for heavy construction (unchanged from 2024), 3.08% for trades (unchanged from 2024), and 0.2% for political subdivision group rate (unchanged from 2024).  

Colorado SB 20-207 
The legislation incrementally increases Colorado's unemployment taxable wage base to $30,600 by calendar year 2026. The wage base increased to $20,400 in 2023 (from $17,000 in 2022), $23,800 in 2024, $27,200 in 2025, and $30,600 in 2026.  Each year thereafter, the wage base will be adjusted by the change in average weekly earnings. 

Connecticut HB 6633 and SB 210
In an effort to improve Connecticut’s Unemployment Insurance (UI) Trust Fund solvency, the legislature passed two bills to implement reforms that were achieved through a collaborative effort of business and labor. Changes to the tax and benefit system, plus the inclusion of indexing various tax and benefits measures, will promote long term UI Trust Fund solvency; reduce employer costs; build in cost predictability to support employer fiscal planning; and stabilize UI benefit payments to unemployed workers.

Under the two bills, the following UI Tax changes are effective January 1, 2025:

• The taxable wage base (TWB) increases from $25,000 to $26,100.
• The state’s new employer rate decreases from 2.5% to 2.2%.
• The state’s minimum charged rate is 0.1%.
• The state’s maximum charged rate is 10.0%.
• To minimize the short-term impact of the TWB increase, charged rates in calendar year 2025 will be reduced by 1.269. As such, the state’s maximum charged rate for calendar year 2025 will be reduced to 7.9%.
• The state’s fund solvency tax rate is 1.0%.
• The minimum and maximum contribution rates for 2025 will be 1.1% and 8.9%, respectively.

Examples of Contribution Rate calculation for calendar year 2025:

Employer A is eligible to receive a charged rate, which is calculated based on the amount of UI benefits charged to their account divided by the taxable payroll reported.  The employer has the following UI benefit charges and taxable wages and is not eligible for an industry sector benefit ratio adjustment:

• $1,500 in UI Benefit Charges / $30,000 in Taxable Wages = 0.0500 Benefit Ratio
• 0.0500 Benefit Ratio = 5.0% Preliminary Charged Rate
• 5.0% / 1.269 divisor = 4.0% Final Charged Rate (rounded to the next higher one-tenth of one percent)
• 4.0% Final Charged Rate + 1.0% Fund Solvency Tax Rate = 5.0% 2025 Contribution Rate

Employer B is eligible to receive a charged rate, has the following UI benefit charges and taxable wages and is eligible for an industry sector benefit ratio adjustment of 0.006:

• $6,000 in Benefit Charges / $30,000 in Taxable Wages = 0.2000 - 0.006 Benefit Ratio Adjustment = 0.1940 Benefit Ratio
• 0.1940 Benefit Ratio = 19.4% Preliminary Charged Rate
• 19.4% is subject to maximum Charged Rate cap of 10.0%
• 10.0% / 1.269 divisor = 7.9% Final Charged Rate (rounded to the next higher one-tenth of one percent)
• 7.9% Final Charged Rate + 1.0% Fund Solvency Tax Rate = 8.9% 2025 Contribution Rate

Delaware HB 433
Delaware has enacted legislation that will increase the taxable wage base as follows: $12,500 for 2025, $14,500 for 2026, and $16,500 for 2027 and thereafter. 

The bill also establishes two possible Assessment Rate Schedules, A & B, for rate years 2025 and 2026 with rates ranging from 0.3% - 5.4% and 0.4% to 5.4%, respectively.  

In addition, the bill revises the experience rating methodology for assigning unemployment assessment rates to employers under the Unemployment Insurance Code in Delaware, replacing the current benefit wage ratio methodology with the benefit ratio methodology used by 19 other states. The change in methodology will become effective beginning in 2027.   The bill also establishes new Benefit Ratio Assessment Rate Tables A-H which will go into effect with the 2027 rate year with minimum rates ranging from 0.2% to 1.21% depending on the table to a maximum rate of 5.4%.

Florida SB 50 
The legislation changes how Florida’s UI tax rate is computed for rates effective 2022 through 2025.

Tax rates effective January 1, 2023 through December 31, 2025, will exclude charges from the second, third and fourth quarters of 2020 and all benefit charges paid as a direct result of a government order to close or reduce capacity of a business due to COVID-19, as determined by the Department of Economic Opportunity. The tax rate calculation will also exclude the application of the positive adjustment factor (trust fund trigger). Lastly, benefit charges from the first and second quarters of 2021 may be decreased if the Office of Economic and Demographic Research (EDR) estimates total tax collection for rate year 2022 will exceed $475.5 million. These changes to the tax rate calculation are repealed if the trust fund reaches $4,071,519,600 on June 1.  On June 1, 2024, the trust fund was $4,462,719,250, per TreasuryDirect.

The new legislation required the state to make three deposits during 2021 to the UI trust fund. The funding comes from online sales tax collected from out-of-state e-commerce companies. In addition, beginning July 2022, and on or before the 25th day of each of the following months, the Florida Department of Revenue will distribute $90 million monthly to the state's UI trust fund. The Department is required to end monthly distributions when the Department of Revenue receives certification from EDR that the ending balance of the UI trust fund exceeds $4,071,519,600 or on December 31, 2025, whichever is earlier.

Georgia SB 160
The bill reinstates the 0.06% administrative assessment which will be in effect for all experience rated employers. This assessment applies to the time frame of January 1, 2024 through December 31, 2026. It is set to expire as of January 1, 2027.  The administrative assessment does not apply to reimbursing employers and those assigned a minimum or maximum rate. The new employer rate has been reduced to 2.64% to account for the assessment, resulting in a total rate of 2.70% for experience based employers. The total new employer rate for non-profit employers will be 2.64%.

Hawaii HB 2471
Hawaii’s Employment Security Law, as it relates to the adequate reserve fund, has been amended. Effective for the calendar years 2023 through 2030, "adequate reserve fund" means an amount that is equal to the amount derived by multiplying the benefit cost rate that is the highest during the 10-year period ending on November 30 of each year by the total remuneration paid by all employers, with respect to all employment for which contributions are payable during the last four calendar quarters ending on June 30 of the same year, as reported on contribution reports filed on or before October 31 of the same year, but does not include the benefit cost rate from June 2020 through August 2021.

Idaho Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
Experienced employer tax rates for 2025 range from 0.225% to 5.4% (0.352% to 5.4% in 2024).

Indiana HB 1111
The law creates a new tax rate Schedule C (former Schedule E) which is to remain in effect through 2025. The rates range from 0.50% to 7.40%.

Iowa Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
Iowa contribution rates will continue to be determined under Rate Table 8 in 2025 and will range from 0.0% to 7.0%. New employers will pay 1.0% and new construction employers will pay 7.0% in 2025.

Effective January 1, 2025, employers will pay unemployment taxes on the first $39,500 paid to each employee, up from $38,200 in 2024.

Kansas HB 2570

The law, in relation to unemployment taxes, provides for the following: 

• Effective with the 2025 rate year, the current SUI rate schedules will be revised to include a 0% rate group for employers with the highest positive rating and SUI tax rates will be lowered for all positive-rated employers. Starting in 2026, changes will also be made to solvency and credit rate adjustments in conformity with the adjustments to the SUI wage base.  The potentially lowest rate on the lowest table is 0.00% and the highest potential rate on the highest rate table is 10.35%.  The schedule expected to be in effect for 2025, Schedule G, has rates ranging from 0.00% to 8.35%.  The SUI rate for new employers will decrease from 6.00% to 5.55% for construction industry employers, and from 2.7% to 1.75% for all other employers.
• Effective July 1, 2024, the Employment Security Interest Assessment Fund (IAF) surcharge is repealed.
• Effective July 1, 2024, the law provides for an annual calculated debt-forgiveness option for active negative-rated employers with a reserve ratio of -7.150% or less. For such employers, a portion of benefit charges will be conditionally forgiven to bring the employer to a reserve ratio of -7.150%, making the employer eligible for assignment to the lowest SUI rate group for the next three calendar years.  A negative-rated employer can forego the debt forgiveness option by submitting a voluntary contribution in an amount sufficient to establish its reserve ratio equal to or greater than -7.149% for the following calendar year.
• Effective with the 2025 rate year, the deadline for employers to make voluntary contributions for the purpose of potentially reducing their SUI tax rate is extended from 30 to 90 days following the mailing date of SUI rate notice.
• Starting in 2026, the current set SUI wage base of $14,000 for 2025 will be adjusted annually as a percentage of the statewide average annual wage. The percentage will increase progressively through 2030.

Kentucky Announcement Relating to 2025 Unemployment Tax Rates
The same unemployment tax rate schedule will continue to be used in 2025. Tax rate Schedule A has been in effect since 2019, with rates that range from 0.3% to 9.0%.

Kentucky Announcement Relating to Professional Employer Organizations
Recent amendments to Kentucky's administrative regulations, specifically 787 KAR 1:010 and 787 KAR 1:370, introduce changes affecting Professional Employer Organizations (PEOs) that aim to streamline unemployment insurance reporting and enhance compliance with state labor laws.  PEOs must now establish separate employer reserve accounts for each client.  This change necessitates the use of a new form, UI-1P, specifically designed for PEOs to apply for these accounts.   The form must be submitted electronically through the Unemployment Insurance Self-Service Web Portal at kewes.ky.gov. PEOs are required to maintain separate records and submit individual state unemployment insurance wage and premium reports for each client.  The regulations mandate that PEOs promptly notify the Office of Unemployment Insurance about any additions or deletions of clients during the relevant reporting quarter.  For newly established PEOs not previously subject to Ky. Rev. Stat. Ann. §336.248, a new employer premium rate will be assigned based on the reserve ratio of their industrial classification.  The regulations clarify that a PEO is not considered a successor employer to any client with whom it has no common ownership, management, or control.

Maine Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
The 2025 employer unemployment tax schedule will remain at Schedule A, the lowest level under the law.

The taxable wage base will continue to be $12,000 for 2025.

Massachusetts Trust Fund Outlook
The Massachusetts Department of Unemployment Assistance released its October 2024 Annual Outlook Report for the Unemployment Insurance (UI) Trust Fund, projecting increasing employer contribution rates over the next several years. The report indicates that the UI tax schedule is projected to move from Schedule C in 2024 to Schedule D in 2025, and then to Schedule F in 2026-2027, before reaching Schedule G in 2028. These escalating schedules will result in higher unemployment tax rates for most employers, with the average contribution rate projected to rise from 2.14% in 2024 to 5.42% by 2028. The increases are deemed necessary to rebuild the trust fund balance, which is forecasted to decline from $1.91 billion at the end of 2024 to near depletion by the end of 2027, assuming current economic projections hold.

Missouri Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
For 2025, there will be a 12% Contribution Rate Adjustment (CRA) reduction, except for any employer whose calculated contribution rate under Section 288.120 is 6% or greater, then it will be a 10% CRA reduction. The rates will range between 0.00% and 6.75%.  

Effective January 1, 2025, employers will pay unemployment taxes on the first $9,500 paid to each employee, down from $10,000 in 2024.

Nebraska LB 1393
Legislative Bill 1393 adds to the calculation of the state's reserve ratio to determine the yield factor used in figuring out an employer's unemployment tax rate. Also, beginning January 1, 2025, the final average combined unemployment tax rate will be reduced by 5% through December 31, 2029.  The yield rate is divided by certain taxable wages to create the average combined tax rate.

Nevada Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
The unemployment tax rates for experienced employers continue to range from 0.25% to 5.4% (consists of 18 rate classes). An experienced employer's unemployment tax rate is determined by a reserve ratio formula. Each year, DETR issues regulation changes in the reserve rate ratio.  So, while the unemployment tax rates continue to range from 0.25% to 5.4% in 2025, an employer's tax rate may change based upon the new reserve ratio changes for the 18 rate classes.  In addition, employers (except those assigned the maximum 5.4% tax rate) pay a 0.05% career enhancement program tax. 

Effective January 1, 2025, employers will pay unemployment taxes on the first $41,800 paid to each employee, up from $40,600 in 2024.

New Hampshire Announcement Relating to 2024/2025 Unemployment Tax Rates and Wage Base
The rate schedule remained the same as that for the second quarter of  2024 with rates ranging from 0.100% to 7.500%. The assigned rate is currently only effective for the third quarter of 2024. Positive balanced employers’ rates reflect a 1.0% fund balance reduction. Negative balanced employers’ rates do include an additional Inverse Rate Surcharge of 0.5%. The rate could change for the fourth quarter of 2024 and the first and second quarters of 2025. If the rate changes, no notification is sent so please refer to the rate indicated on your Employer’s Tax and Wage Report each quarter to ensure you are paying at the correct rate. 

The taxable wage base remained $14,000 for calendar year 2025. 

New Jersey (fiscal year jurisdiction) Announcement Relating to 2024/2025 Unemployment Tax Rates and Wage Base
The New Jersey Department of Labor and Workforce Development announced that unemployment tax rates will be determined under Table D for the 2025 fiscal year that runs from July 1, 2024 to June 30, 2025 (higher Table E was in effect for the prior fiscal year).  The unemployment tax rates in Table D range from 0.60% to 5.40% for positive reserve ratio employers; and from 5.60% to 6.40% for deficit reverse ratio employers. The new employer rate under Table D is 3.1%.

Effective January 1, 2025, employers will pay unemployment taxes on the first $43,300 paid to each employee, up from $42,300 in 2024. 

New York Announcement Relating to Future Wage Bases
New York has announced that future unemployment taxable wage bases are to increase as follows: (1) $12,500 in 2024; (2) $12,800 in 2025; and (3) $13,000 in 2026. After 2026, the wage base is permanently adjusted on January 1 of each year to 16% of the state average annual wage, rounded up to the nearest $100. The state average annual wage is established no later than May 31 of each year. The average annual wage cannot be reduced from the prior-year level.

New York Announcement Relating to Interest Assessment Surcharge
In June of 2024, businesses across the state received Interest Assessment Surcharge (IAS) bills. IAS bill payments go toward paying down the interest on the state’s federal Title XII advances used to pay benefits to unemployed workers during the pandemic. The New York State Department of Labor is required by law to collect this payment annually from employers who make unemployment insurance contributions until the state’s debt is paid.

The IAS rate is based on the amount of federal interest due on September 30.  The current year rate (2024)  is .12%, a reduction from last year’s rate (2023) of .18%. The IAS for employers is calculated using the wages subject to contributions for the current payroll year (e.g., the fourth quarter of 2022 through the third quarter of 2023) and multiplying those wages by the IAS rate of .12%.

Ohio Announcement Relating to 2025 Unemployment Tax Rates and Wage Bases
Taxable wage base: $9,000 (unchanged from 2024). New employer tax rate: 2.7% for non-construction employers, 5.6% for construction employers (unchanged from 2024). Experienced employer tax rate range: 0.4% to 10.1% (unchanged from 2024).

Oregon Announcement Relating to 2025 Unemployment Tax Rates and Wage Bases
The Oregon 2025 SUI tax rates were issued on November 15, 2024.  The rate schedule remained Schedule III, which will result in varying effects on rates as the ratios changed.  With HB 3389, the state is no longer using the 2020 computation period as this ended with the 2024 rates. Therefore, the computation period has returned to the normal computation for 2025 rates of July 1, 2021 to June 30, 2024. Included in the above total rate is a special payroll tax offset assessed all but maximum rated employers.  It is a 0.09% Supplemental Employment Department Administration Fund rate assessed for all four quarters (maximum rates are exempt). This does not increase the rate. It is just an offset. Since this is an odd numbered year, there is a 0.03% Wage Security Fund rate for the first quarter (maximum rates are exempt).  The total of the two surcharges for the first quarter is 0.12%.  This does not increase the rate.  It is just offset. The rates range from 0.9% to 5.4%.  

The taxable wage base increased to $54,300 for 2025 (from $52,800 for 2024).

Pennsylvania Announcement Relating to 2025 Unemployment Tax Rates and Wage Bases
Pennsylvania announced their rate schedule for 2025. Rates range from 1.1419% to 10.3734%. The State Adjustment Factor is 0.75% and the Interest Factor is 0.00%, which both remained the same as that of 2024, and the Additional Contributions Factor remained 0.60% and the Surcharge Adjustment multiplier remained 9.20%.  The employee rate, which is not included in the above rate, remained 0.07%.  If a delinquency exists on the account through the second quarter of 2024, 3% is added to the basic contribution rate.  Newly liable non-construction employers face a rate of 3.8220%, while construction employers will see a 10.5924% rate. 

The taxable wage base remains at $10,000.

South Carolina Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
Experienced employer tax rate range: 0.06% to 5.46% (unchanged from 2024). As with 2024, there will continue to be no solvency tax surcharge imposed on employers in 2025.  The taxable wage base will remain $14,000 for 2025. 

South Dakota Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
South Dakota's unemployment tax structure for 2025 will remain largely unchanged from previous years.  Experienced employers will continue to have their unemployment tax rates determined under Schedule C, with rates ranging from 0% to 8.8%. This rate includes an investment fee that varies from 0% to 0.53%, depending on the employer's reserve ratio.  For experienced employers with a reserve ratio below 2.25%, an additional 0.02% administrative fee will be applied.  New employers entering the non-construction sector will face a consistent rate structure, with a 1.2% rate for their first year of business, followed by a 1% rate for both their second and third years.  The construction industry, however, maintains higher rates for new employers, with a 6.0% rate in the first year and a 3.0% rate for the second and third years.  It's important to note that new employers who end their first year with a negative account balance may be subject to extended application of the initial rates of 1.2% for non-construction and 6.0% for construction businesses.  All new employer rates incorporate a 0.55% investment fee. 

The taxable wage base will remain $15,000 for 2025.

Tennessee (fiscal year jurisdiction) Announcement Relating to 2024/2025 Unemployment Tax Rates and Wage Bases
Effective July 1, 2024 through December 31, 2024, Premium Rate Table 6 remains in effect. Employer rates range from 0.01% to 2.3% for positive-balance employers and from 5.0% to 10.0% for negative-balance employers.

By February 1 of each year, the Department must report to the state legislature the UI trust fund balance as of the prior December 31, for purposes of determining the SUI taxable wage base for the calendar year. If the UI trust fund balance on December 31 of any year is less than $900 million, the taxable wage base is $9,000. If the trust fund balance is above $900 million, but less than $1 billion on December 31, the taxable wage base is $8,000. If the trust fund balance exceeds $1 billion on December 31, the taxable wage base is $7,000.

Utah Announcement Relating to 2025 Unemployment Tax Rates and Wage Bases
The minimum and maximum tax rates are 0.2% and 7.2%. A 1.0% delinquent tax rate may be added to the overall rate for employers that did not pay all contributions for the fiscal year ending June 30. In addition, the reserve factor is 1.10 and the social cost is fixed at 0.002 in 2025. The reserve factor is an adjustment to the benefit ratio used to maintain an adequate balance in the benefit reserve fund. The social cost applies to all employers to recover benefit costs that cannot be attributed to a specific employers. 

The taxable wage base is $48,900 for 2025 (up from $47,000 for 2024).

Vermont (fiscal year jurisdiction) Announcement Relating to 2024/2025 Unemployment Tax Rates and 2025 Wage Base
Effective July 1, 2024 to June 30, 2025, the Vermont contribution rate schedule for employers remains Schedule 1. Rates under Schedule 1 range from 0.4% for Rate Class 0 to 5.4% for Rate Class 20. New employers pay 1.0% for this period, while new out-of-state employers in certain industries pay as follows: 2.2% for employers involved in the construction of buildings; 3.9% for employers involved in heavy and civil engineering construction; and 2.8% for specialty trade contractors.

Effective January 1, 2025, employers will pay unemployment taxes on the first $14,800 paid to each employee, up from $14,300 in 2024.

Virgin Islands Bill No. 33-0090
The bill (amending Title 24, chapter 12, sections 302 and 308 of the Virgin Islands Code) replaces the reserve ratio experience rating methodology with a payroll variation methodology to determine employer unemployment Insurance tax rates beginning January 1, 2024.  With the new methodology, employers’ tax rates will be based on changes in payroll for the preceding twelve quarters.  As an employer's payroll increases, the tax rate would be lowered, and the converse for employers that have decreasing payrolls.

Virginia Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
The unemployment base tax rate for experienced rated employers is calculated based on claim history and will range from 0.1% to 6.2%. During the pandemic, Virginia capped unemployment tax rates to limit the tax liability for employers during this period.  For 2025, tax rates will return to the regular contribution schedule. Additionally, a state law passed in 2024 that lowers base tax rates and allocates an equal amount in the form of an administrative fee to be used for operational costs will be reflected separately on an employer's unemployment tax notice.  New employers will pay a rate of 2.5%, in addition to any pool charge and fund-builder changes that may be required.

Washington Announcement Relating to 2025 Wage Base
Effective January 1, 2025, employers will pay unemployment taxes on the first $72,800 paid to each employee, up from $68,500 in 2024.

Washington State SB 5061
The legislation has a number of provisions designed to provide unemployment tax relief to employers. The legislation sets the maximum social tax as follows: (1) 0.50% for 2021; (2) 0.75% for 2022; (3) 0.80% for 2023; (4) 0.85% for 2024; and (5) 0.90% for 2025 and suspends the solvency surcharge for 2021 to 2025.  From February 8, 2021 until May 31, 2026, the 10% Voluntary Contribution Program (VCP) surcharge is not charged and the VCP payment deadline is extended to March 31. The minimum amount of a voluntary contribution must result in a recomputed benefit ratio at least two rate classes lower than the original rate class; and only employers who have moved up at least eight rate classes may use the program.

Washington State HB 1901
The expanded access for employers to Washington State's voluntary unemployment insurance (UI) contributions was permanently extended. Voluntary UI contributions allow an employer to reduce its experience rating by reimbursing the UI trust fund for unemployment benefits paid to its former employees. An employer must meet certain criteria to participate in the program. In 2021, the state temporarily expanded access to the program by enacting temporary changes (see SB 5061 above). These changes were set to expire on May 31, 2026. House Bill 1901 makes the temporary expanded access to the program permanent. The now permanent changes include the March 31 submission date for the program (previously, February 15), increasing at least eight rate classes from the previous year (previously, 12 rate classes), and payments resulting in a reduction of two rate classes (previously, four rate classes). In addition, no surcharge will be applied to any voluntary payments (previously, there was a 10% surcharge).

Wisconsin Announcement Relating to 2025 Unemployment Tax Rates and Wage Base
Unemployment tax rates will continue to be determined under Schedule D in 2025, the lowest schedule allowed by law, with rates ranging from 0.00% to 12.00% for employers with payroll under $500,000 and from 0.05% to 12.00% for employers with payroll of $500,000 or more, surcharges included.  The surcharges will remain in effect through the end of calendar year 2025.  New non-construction employers tax rate: Payrolls under $500,000 will continue to pay 3.05%. Payrolls of $500,000 or more (other than new construction employers) will continue to pay 3.25%.  New construction employers tax rate: Payrolls under $500,000 remain at 2.90%. Payrolls over $500,000 remain at 3.10%.

 The taxable wage base remained unchanged at $14,000.

Wyoming Announcement Relating to 2025 Wage Base
Effective January 1, 2025, employers will pay unemployment taxes on the first $32,400 paid to each employee, up from $30,900 in 2024. 

Conclusion

The COVID-19 pandemic caused a depletion of state unemployment trust funds used to pay unemployment benefits, prompting many states to take action to mitigate potential increases in tax rates. After eight years of declining average SUI tax rates, average rates increased by 9.9% in 2021, then decreased by 7.9% in 2022, then decreased another 4.6% in 2023. It is anticipated that average SUI tax rates will remain relatively flat in 2024 (U.S. DOL information has not been issued) and in 2025.  While it is prudent for employers to be aware of the direction of SUI tax rates using indicators like state unemployment trust fund balance trends, state legislative initiatives, and overall economic conditions (all considered to be “uncontrollable factors”),  it continues to be important for employers to take their own actions (“controllable factors”) to help keep SUI tax rates and associated costs as low as possible by: 

• Diligently adjudicating unemployment claims
• Auditing benefit charges and timely appealing those that appear improper 
• Ensuring all quarterly contribution and wage reports are filed timely
• Identifying and reconciling any outstanding liabilities on state unemployment accounts  
• Utilizing available state-specific rating strategies to help lower SUI tax rates (e.g., voluntary contributions, joint account formation, negative write-off payments, payroll variation elections, etc.) 

​Even after rates have been calculated and assigned, there are actions that employers can take to help reduce 2025 SUI tax rates. Visit the Equifax blog titled: Planning Strategies to Help Reduce SUI Tax Burdens in 2023 and Beyond for additional insights.

To keep up-to-date, please visit our Employer Unemployment Insurance Resource Center (log-in may be required).  The site includes a 2025 Tax Guide intended to assist employers in identifying potential risks associated with increases in SUI tax costs from 2024 to 2025 (e.g., changes in minimum and maximum SUI tax rates, changes in wage bases, etc.). 

Please reach out to your Equifax representative to help address potential risks associated with the current unemployment landscape. Not a current client? Please feel free to contact our Employment Tax Consulting Group with any questions.

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Footnotes:

1. Per the FUTA Credit Reduction site published by the United States Department of Labor (“DOL”) Employment & Training Administration.
2. Per data obtained from FiscalData (an official website jointly created by the U.S. Department of the Treasury and the Bureau of the Fiscal Service).
3. Per U.S. DOL, SUI Trust Fund Solvency Report for 2024 (issued March 2024).  The Average High Cost Multiple (AHCM) is measured as the Reserve Ratio (Trust Fund as a % of Total Wages) at the end of the calendar year immediately preceding the report year, divided by the Average High Cost Rate.  The Average High Cost Rate is the average of the three highest calendar year benefit cost rates in the last 20 years (or a period including three recessions, if longer).  
4. Per respective Unemployment Insurance Data Summary reports published by the U.S. Department of Labor and data obtained from FiscalData, TreasuryDirect (an official website of the U.S. Department of Treasury), and Average Employer Contribution Rates by State.
5. Information obtained from sources considered to be reliable (e.g., state legislative changes, state workforce agency announcements, state surveys, etc.).
6. Per Average Employer Contribution Rates by State issued by the U.S. Department of Labor.  Net Trust Fund Balances per respective Unemployment Insurance Data Summary reports published by the U.S. Department of Labor and FiscalData and TreasuryDirect.

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The information provided is intended as general guidance and is not intended to convey any tax, benefits, or legal advice. For information pertaining to your company and its specific facts and needs, please consult your own tax advisor or legal counsel. Equifax Workforce Solutions provides services that can help employers reduce their compliance risks. Details on our provision of these services and related support will be contained in your services agreement. Links to sources may be to third party sites. We have no control over and assume no responsibility for the content, privacy policies or practices of any third party sites or services.