By Tom Towson
Last updated: May 8, 2023 (changes since last update on March 15, 2023 will begin with **NEW**)
Check out the newest information in the Outlook for State Unemployment Insurance (SUI) Tax Rates in 2024 and Beyond
Many states acted quickly in response to the COVID-19 pandemic to help mitigate sizable increases in 2021 SUI tax rates. Even with these mitigation efforts, SUI tax rates increased, on average, from 1.72% in 2020 to 1.89% in 2021 to 2.30% in 2022.¹ Now the question becomes, what is the outlook for 2023 SUI tax rates?
Before addressing SUI tax rates, FUTA tax rates and FUTA credit reductions are top of mind for employers as well. The U.S. Department of Labor, as of November 10, 2022, announced that (California, Connecticut, Illinois, New York and the Virgin Islands) have had outstanding Title XII advances on January 1 for two consecutive years (2021 and 2022), and on November 10, 2022. As such, these jurisdictions will be subject to a FUTA credit reduction for 2022. As such, the net FUTA tax rate for 2022. The net FUTA tax rate for 2022 will increase by 50% from 0.60% to 0.90% (the U.S. Virgin Islands will have its FUTA tax credit reduced by 3.6% for an effective FUTA tax rate of 4.2%.)
On January 25, 2023, the state of Illinois repaid all outstanding Title XII advances. Because of this action, the state should not be subject to a FUTA credit reduction for calendar year 2023, as long as the state does not borrow again and have outstanding advances as of November 10, 2023.
**New** FUTA Credit Reductions - 2023
Illinois: On January 25, 2023, the state of Illinois repaid all outstanding Title XII advances. Because of this action, the state should not be subject to a FUTA credit reduction for calendar year 2023, as long as the state does not borrow again and have outstanding advances as of November 10, 2023.
Colorado and Pennsylvania: Colorado and Pennsylvania took Title XII advances during the first quarter of 2023. These states did not have outstanding advances on January 1st of two consecutive years so should not be subject to a FUTA credit reduction for 2023.
Virgin Islands: If the Virgin Islands continues to have an outstanding Title XII advance as of November 10, 2023, the jurisdiction will be subject to another 0.30% increase in the FUTA tax rate, from 4.20% in 2022 to 4.50% in 2023. The BCR rate has been waived during all prior years.
Other Jurisdictions: If California, Connecticut, and New York continue to have outstanding Title XII advances as of November 10, 2023, the jurisdictions will be subject to another 0.30% increase in the FUTA tax rate, from 0.90% in 2022 to 1.20% in 2023.
**NEW** Advances to State Unemployment Funds² (Title XII of the Social Security Act)
* Federal Title XII advance existed prior to COVID-19 crisis and continues to be subject to FUTA credit reductions.
(a) As of March 31, 2011, the highest levels experienced as a result of the Great Recession.
(b) As of March 31, 2021, the highest levels experienced as a result of the COVID-19 Pandemic.
(c) As of February 7, 2023
A logical starting point for addressing the outlook for 2023 SUI tax rates is state unemployment trust fund balances, a primary factor in developing SUI tax rates. As such, particular attention should be paid to these balances as an indicator of where rates may be headed in 2023 and beyond.
As depicted in the following graph, net trust fund balances (trust fund balance net of 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, trust fund balances rebounded and were a net positive, for the first time after the COVID-19 pandemic. As of the end of Q4 2022, net trust fund balances were positive $27.76 billion.³
Net trust fund balances were substantially higher pre-COVID than they were pre-Great Recession. Because of this, 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 December 31, 2022.³
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.⁴ Over the past 15 years, taxable wage bases have increased by an average of 2.5% annually. During the height of the Great Recession (from 2008 to 2010), the 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 an average of 3.6%.
The following table provides 2023 annual taxable wage bases by state:
(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.
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 economic downturns impact 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 US did not hit its peak until 2012. After that peak, average rates declined for eight consecutive years through 2020. From 2020 to 2021, the average SUI tax rate increased from 1.72% to 1.89% (a 9.9% increase). From 2020 to 2021, the average SUI tax rate increased from 1.89% to an estimated 2.30% (a 21.7% increase).
The following contains examples of actions taken by states that could impact 2023 and future SUI tax rates:
Contribution rates in Alaska for 2023 range from 1.00% to 5.4% for eligible employers, based on payroll decline experience. The tax rates for new employers vary by industry but will range from 1.31% to 1.86%, and the tax rate for employees in 2023 will be 0.51%. The taxable wage base for 2023 will be $47,100 (from 45,200 in 2022).
The Alabama 2023 SUI tax rates were dated December 13, 2022. Schedule C decreased to Schedule A, and the shared cost, a constant added to all employers' rates, decreased to 0.00%. The rates range from 0.20% to 5.40% (0.05% to 6.10% in 2022). The taxable wage base remains $8,000.
The Arkansas 2023 SUI tax rates are dated December 21, 2022. The basic rate table remained the same and the Stabilization Tax Rate remained at 0.2%. The new employer tax rate will remain at 3.1%. The minimum and maximum unemployment tax rates for experienced employers will continue to be 0.30% and 14.20%, respectively. The taxable wage base decreased to $7,000 in 2023 (from $10,000 in 2022).
Arkansas HB 1430 (relating to 2024 Unemployment Tax Rates and Wage Base)
The bill reduces: (1) the new employer unemployment tax rate from 2.9% to 1.9%; (2) the administrative assessment from 0.2% to 0.125% in the 2024 fiscal year; and (3) the penalty rate for failure to make timely unemployment tax payments from 14% to 10%. The bill would also set the unemployment taxable wage base to $7,000, beginning with 2024, when the unemployment trust fund balance is in excess of $600 million.
Unemployment tax rates for experienced employers in the 2023 tax year will range from 0.07% to 18.78% (0.08% to 20.93% in 2022). The new employer rate will remain at 2.0%. The taxable wage base will increase to $8,000 for 2023 (from $7,000 for 2022).
The bill earmarks $250 million from the General Fund to the Employment Development Department (EDD) to pay towards an outstanding balance of advances under Title XII of the Social Security Act (SSA) for unemployment benefit claims during the COVID-19 pandemic. The bill also notes that the legislature intends to appropriate $500 million in the 2024 budget bill to provide relief to small businesses as result of anticipated tax rate increases due to the FUTA credit reduction.
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 2023. New employers continue to pay 3.4% in 2023 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 2023. The UI taxable wage base in California for 2023 remains at $7,000.
The legislation incrementally increases Colorado's unemployment taxable wage base to $30,600 by calendar year 2026. The wage base will increase 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.
The law amends Colorado's unemployment law to extend the hold on an employer's solvency surcharge through calendar year 2023.
The Colorado rates were released on November 30, 2022. The base rate schedule for reserve ratio 0.000 to DEFICIT remains in effect. Rates range from: 0.75% to 10.39% and the taxable wage base increased from $17,000 to $20,400 in 2023.
The state indicated that benefits paid to those employees who were unemployed because of the COVID-19 pandemic will not be charged to employer accounts. Adjustments have already been made to charges that impact the 2023 rate. If you believe you are owed additional adjustments, a protest must be filed online at cdle.colorado.gov/premium-rates under the links for “Rate Protest” and “Submit A Written Protest” after December 1, 2022, but on or before the deadline of January 13, 2023.
Please note that while the rate notices indicate that the protest deadline is 20 days from the issuance date, which would be December 20, 2022, the cover letter that was mailed with the rates indicates that the protest period goes from December 1, 2022 to January 13, 2023.
The law increases the unemployment taxable wage base from $15,000 to $25,000, beginning January 1, 2024. Each year thereafter, the wage base will be indexed for inflation. The bill also expands the range of experienced unemployment tax rates from 0.1% to 10%, beginning January 1, 2024. Other provisions that will take effect on January 1, 2024 include: not charging employers for unemployment benefits claimed through the state's shared work program during periods of high unemployment and capping the fund solvency tax at 1.0%. During a period of economic recession, the maximum solvency tax rate will be reduced to 0.5%, according to the bill. Beginning January 1, 2022, the legislation will require the Connecticut Department of Labor to adjust the benefit ratio for each employer in an industry sector (based on the North American Industry Classification System) downward by 50% of the average increase in that sector if the average benefit ratio for all employers within that sector increases over the prior calendar year's average by 0.01 or greater. In addition, the legislation temporarily changes the lookback period for determining an employer's unemployment experience rating. The lookback period has historically been three consecutive years preceding the computation date. For 2026, the lookback period will be one year. For 2027, the lookback period will be two years.
Sec. 211 of Public Act 22-118 was passed to reduce rates to all contributory employers by 0.2% in 2023. The law reduces the New Employer Rate by 0.2% and caps the Fund Tax Rate at 1.2% (from 1.4%). This is only in effect for the 2023 rate year.
The Connecticut 2023 SUI tax rates are dated December 30, 2022.. The new employer tax rate will decrease from 3.0% to 2.8%. The minimum and maximum unemployment tax rates for experienced employers will decrease from that of 2022 to be 1.7% and 6.6%, respectively. The 2023 taxable wage base remains $15,000.
The Delaware 2023 SUI tax rates were dated February 7, 2023. The State Experience Factor increased to 35 and the supplemental rate remained 0.2%. The state passed legislation to keep rates low for employers for one more year. Most employers will receive an assigned rate that is lower than the earned rate which would have been calculated, except for delinquency rates (conditions apply). The rates range from 0.30% to 8.20%. The taxable wage base decreased from $14,500 to $10,500 for 2023.
The District of Columbia Department of Employment Services has announced that unemployment tax rates will continue to be determined under Rate Table VI in 2023. Experience rates under Table VI range from 1.0% to 4.4% for positive-balanced employers and from 6.2% to 7.4% for negative-balanced employers. The new employer tax rate remains at 2.7% and the 0.2% administrative assessment (paid by both experienced and new employers) continues to be in effect in 2023. The unemployment taxable wage base remains at $9,000 in 2023.
The legislation changes how Florida’s UI tax rate is computed for rates effective 2022 through 2025.
Tax rates effective January 1, 2022, 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. Since EDR has until January 1, 2022, to advise the Department whether to decrease benefit charges, the Department has until March 1, 2022, to post rates for the 2022 calendar year.
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 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.
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.
The Florida 2023 SUI tax rates are dated December 22, 2022. The minimum rate is 0.10% and the maximum rate is 5.4%, except that employers participating in the short-time compensation program may be subject to a maximum rate of 6.4%. New employers pay 2.7% in 2023. The final adjustment factor remained 0.000 and the multiplier decreased to 0.1628 for 2023. The taxable wage base remains $7,000.
Effective January 1, 2023, the unemployment tax administrative assessment expired. This tax had been in place for several decades. It was last reauthorized by the Georgia Legislature through December 31, 2022. The Georgia state legislature decided not to renew this tax in the most recent legislative session. Therefore, the Administrative Assessment portion of an employer's total tax rate for 2023 will reflect 0.00% to replace the previous Administrative Assessment of 0.06%. According to the Georgia Department of Labor (GDOL), with the elimination of the administrative assessment, there is an accompanying change in the base employer tax rates from the base rate tables, which may result in a small total tax rate increase for employers. The GDOL also notes that the annual unemployment tax rate notices are available on the Employer Portal and states that these rate notices will not be mailed to employers.
The rates range from 0.06% to 8.10%. The taxable wage base remains at $9,500.
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.
Schedule F will be in effect in Hawaii for 2023, with rates ranging from 1.2% to 4.0% for positive reserve ratio employers and from 4.4% to 6.2% for negative reserve ratio employers. The contribution rate for new employers will be 4.0% and the Employment and Training Assessment Rate will remain at 0.01%. The 2023 taxable wage base will be $56,700, from $51,600 for 2022.
For calendar year 2023, the adjusted state experience factor is 127% and the benefit conversion factor remains at 138.4%. Total rates range from 0.850% to 8.650%, including the 0.55% fund building factor in effect for 2023. An employer whose contribution rate is 5.40% or higher and whose total quarterly wages are less than $50,000 pays contributions at 5.40% in that quarter. New employers pay 3.950% for 2023. There are no NAICS-rated sectors in 2023 that will pay a higher entry rate. The taxable wage base increased to $13,271 for 2023 (from $12,960 for 2022).
The bill freezes unemployment tax rates at 2021 levels for the 2022 and 2023 tax years.
In 2023, contribution rate amounts are the same as they were in 2022. Employers in the best positive-rate class continue to be assigned a tax rate of 0.207% and those in the least positive-rate class are assigned a tax rate of 0.691%. In 2023, employers in the least negative-rate class will continue to pay a rate of 1.245%, while those in the most deficit-rate class continue to pay at the rate of 5.4%. The taxable wage base for 2023, increases to $49,900, up from $46,500 in 2022. The standard rate is 1.0%.
The Illinois Unemployment Insurance Act includes the following sections relating to 2023 rate computation factors:
Section 1505 D-3: The adjusted state experience factor for calendar year 2023 shall be increased by 16% absolute above the adjusted state experience factor as calculated without regard to this subsection. The increase in the adjusted state experience factor for calendar year 2023 pursuant to this subsection shall not be counted for purposes of applying paragraph 3 or 4 of subsection D to the calculation of the adjusted state experience factor for calendar year 2024.
Section 1506.6: For each employer whose contribution rate for calendar year 2023 is determined pursuant to Section 1500 or 1506.1, in addition to the contribution rate established pursuant to Section 1506.3, an additional surcharge of 0.325% shall be added to the contribution rate. The surcharge established by this Section shall be due at the same time as other contributions with respect to the quarter are due, as provided in Section 1400. Payments attributable to the surcharge established pursuant to this Section shall be contributions and deposited into the clearing account.
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%.
The Indiana 2023 SUI tax rates are dated January 2, 2023. Schedule C remained in effect. The rates range from 0.50% to 7.40%. The state of Indiana allows voluntary contributions which must be made by February 1, 2023. Please note all voluntary contributions must be submitted electronically through the employer portal on the state website. The taxable wage base remains $9,500.
On August 24, 2022, Iowa Workforce Development (IWD) announced that the unemployment tax rate schedule used to determine employer rates will be at the lowest level in 24 years in 2023. State law requires the IWD to establish an annual unemployment tax rate table. There is a trigger for determining which rate table will be in effect that is mainly based on the state's unemployment trust fund, benefit history and covered wage growth. For the past five years, unemployment tax rates have been determined from Table 7. This is the second lowest rate table. In 2023, rates will be determined under Table 8, which is the lowest rate table. Rates under Table 8 range from 0% to 7%. Rates under table 7 range from 0% to 7.5%. The unemployment taxable wage base will increase from $34,800 to $36,100 in 2023.
The Kansas 2023 SUI tax rates were issued on November 10, 2022. The rate table remained the same and the solvency adjustment remained 0.00%. A Rate Group Multiplier of -0.03158 has been applied to all brackets of the table leading to lower tax rates across the board. The rates range from 0.17% to 6.40%. The taxable wage base remains $14,000.
Schedule A will be in use for tax year 2023. Under this schedule, positively rated employers will pay unemployment tax rates from 0.30% to 2.4%, and negatively rated employers will pay unemployment tax rates from 6.50% to 9.00%. The taxable wage base has increased from $10,800 to $11,100 for tax year 2023. Contribution rate notices for contributory employers will be mailed out in early December.
Due to the passage of House Bill 144, signed into law on March 22 /2022, the taxable wages used to determine the reserve ratio have changed. Instead of using three years of taxable wages, the 2023 tax rate calculation uses only one year of taxable wages: third quarter 2021 through second quarter 2022.
The Louisiana Workforce Commission has posted the 2023 unemployment tax rate table. The experienced employer rates will continue to range between 0.09% and 6.20%. Rates for negative-rated employers will range from 2.22% to 6.2% while rates for positive-rated employers will range from 0.09% to 1.95%. The new employer rate is the average rate for employers in the new employer's industrial classification according to the latest rate computation. The unemployment taxable wage base for 2023 will remain at $7,700.
The Maine 2023 SUI tax rates are dated December 29, 2022. The unemployment tax rate table decreased from Schedule B in 2022 to Schedule A in 2023, the lowest unemployment tax schedule under law. Contribution rates will be adjusted by a 0.07% Competitive Skills Scholarship Fund (CSSF) rate and a 0.14% Unemployment Program Administrative Fund (UPAF) rate that are in effect. As adjusted, rates for 2023 range from 0.22% to 5.69%. New employers pay a combined total rate of 2.19% in 2023. The taxable wage base remains $12,000.
The Maryland 2023 SUI tax rates are dated January 14, 2023. For calendar year 2023, rates are determined under Table C and range from 1.00% to 10.50%. Once again employers will be granted the lower of the two rate computations, 2020 or 2023 as applied to table C. New employers pay 2.30% for 2023, except that new construction employers headquartered in another state pay 5.10%. The taxable wage base remains $8,500.
The Massachusetts 2023 SUI tax rates are dated December 29, 2022. The table decreased from E to A. The Solvency Assessment decreased from 0.59% to 0.37%, but the COVID-19 Recovery Assessment increased from 12.5% to 126.4% of the basic rate which will cause the rates to be higher than last year. The total rates range from 1.324% to 19.572%. The taxable wage base remains $15,000.
Contribution rates for employers with three or more years of experience will continue to range from 0.06% to 10.3% in 2023. The maximum rate of 10.3% includes a 6.3% maximum chargeable benefit component, a 3.0% maximum account building component, and a 1.0% maximum nonchargeable benefits component. Note that if the employer has submitted no quarterly tax reports, that employer's maximum tax rate will be 10.3%, and the employer also will be assessed a penalty of 3.0%, which is separate from the contribution rate. In addition, the new employer rate remains at 2.7%, plus part of its chargeable benefits component depending on the employer’s year of liability, except for new construction employers.
The law reduces the amount of unemployment tax and assessments a taxpaying employer will owe in 2022 and 2023. The legislation changes the 2022 and 2023 base rate from 0.50% to 0.10%, the 2022 and 2023 additional assessment from 14.00% to 0.00%, and the 2022 special assessment (federal interest loan assessment) from 1.80% to 0%.
The Minnesota 2023 SUI tax rates are dated December 8, 2022. The Base Rate remained 0.1%, and the Workforce Enhancement Fee of 0.1% remained the same. The rates range from 0.20% to 9.10% which includes the 0.1% Workforce Enhancement Fee. Tax rates for new employers vary by industry and will range from 1.0% to 8.9% in 2023. An additional assessment will not be applied in 2023 as prescribed by SB 2677 (see above). The taxable wage base for unemployment tax purposes will increase from $38,000 to $40,000 for 2023.
The act provides that the general experience rate for 2021 shall be 0%; provides that charges attributed to each employer's individual experience rate for the period March 8, 2020, through June 30, 2020, will not impact the employer's individual experience rate calculations for purposes of calculating the total unemployment insurance rate for 2021 and the two subsequent tax rate years; provides that charges attributed to each employer's individual experience rate for the period July 1, 2020 through December 31, 2020, will not impact the employer's individual experience rate calculations for purposes of calculating the total unemployment insurance rate for 2022 and the two subsequent tax rate years.
**New** Mississippi SB 2810
A provision within the law clarifies that unemployment benefits paid for reasons relating to the COVID-19 health emergency will not be used for the purposes of calculating the general experience rate assigned to employers. This provision retroactively takes effect on January 1, 2023. Existing state law in Miss. Code Ann. §71-5-355 already states that benefit charges attributable to each individual employer's experience rate: (1) from March 8, 2020 through June 30, 2020 will not impact the individual employer's unemployment tax rate calculation for 2021, 2022, and 2023; and (2) from July 1, 2020 through December 31, 2020 will not impact the individual employer's unemployment tax rate calculation for 2022, 2023, and 2024.
The Missouri 2023 SUI tax rates were dated December 5, 2022. The contribution rate of an experience-rated employer may range from 0.0% to 6.975%. For experience-rated employers that are participating in the workshare program, rates could range from 0.0% to 9.765%. Both of these ranges include the maximum rate surcharge and/or contribution rate adjustment. The rate payable by new employers in 2023 is 2.511%. New construction and mining employers also will pay 2.511% in 2023. Note, the new nonprofit employer contribution rate is 1.00%. The taxable wage base decreases from $11,000 in 2022 to $10,500 in 2023.
The Montana 2023 SUI tax rates are dated December 20, 2022. For 2023, Schedule I remains in effect and there is also a 0.13% Administrative Fund Tax (AFT) for minimum rated employers and a 0.18% AFT for all other experience-rated employers. Rates range from 0.13% to 6.30%. The taxable wage base increased to $40,500 for 2023 (from $38,100 for 2022).
Nebraska unemployment tax rates for 2023 have been released. Rates for experienced employers will range from 0% to 0.73% in 2023 for positive-rated employers (0% to 1.05% in 2022). The rate for negative-rated employers will remain at 5.4%. The unemployment tax rate for new non-construction employers (1.25%) and new construction employers (5.4%) also will remain unchanged. The taxable wage base will remain at $9,000. However, the taxable wage base will be $24,000 for employers in UI Tax Category 20.
The Nevada Department of Employment, Training and Rehabilitation's (DETR) Employment Security Division (ESD) has issued unemployment tax rate information for 2023. The new employer tax rate continues to be 2.95%. The unemployment tax rate range for experienced employers continues to be from 0.25% to 5.4% (consists of 18 rate classes). While the unemployment tax rates continue to range from 0.25% to 5.4% in 2023, 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.
The taxable wage base will increase to $40,100 ($36,600 in 2022).
New Hampshire 2022/2023 SUI tax rates were issued on September 2, 2022. The rate tables remained the same (rates range from 0.1% to 8.5%), the rate reduction remained 0.00% and the Inverse Rate Surcharge of 1.5% remained added to negative balanced employers. The Emergency Power Surcharge of 0.5% is not currently in effect. The assigned rates are currently only effective for the third quarter of 2022. The 2023 taxable wage base remains $14,000.
As a response to New Hampshire’s strong unemployment trust fund, New Hampshire businesses will receive a 30% tax rate reduction for the fourth quarter of 2022. The tax rate reduction is triggered by state law when the fund maintains a balance of $250 million or more for an entire calendar quarter. Despite an unprecedented surge in benefit payments provided during 2020 and 2021, New Hampshire’s unemployment trust fund is above pre-pandemic levels and is now back over $300 million. According to the state’s unemployment insurance tax rate chart, the fourth-quarter solvency-threshold tax rate reduction for positive-rated experienced employers will be 0.5%, and the surcharge for negative-rated experienced employers will decrease to 1% from 1.5%. Including the aforementioned rate reduction, unemployment tax rates for positive-rated experienced employers will range from 0.1% to 2.1%. Rates for negative-rated experienced employers will range from 3.8% to 8%. The unemployment tax rate for new employers will be 2.2% for the fourth quarter of 2022.
Q1 2023: Unemployment tax rates for New Hampshire employers remained unchanged for the first quarter of 2023. The fund balance reduction is 0.5% and no emergency power surcharge applies. Negative-rated employers (employers whose rates are assigned under Schedule II or III) will continue to have an Inverse Rate Surcharge of 1.0% added to their tax rates during the first quarter of 2023. The new employer tax rate remains 2.2%
Q2 2023: Due to maintaining a trust fund balance of at least $350 million for an entire quarter, New Hampshire Employment Security announced that for the second quarter of 2023: (1) the fund balance reduction is 1% for positive rated employers (Schedule I), up from 0.5% in the first quarter; (2) the emergency power surcharge is 0% (no change from the first quarter of 2023); and (3) the inverse rate surcharge assigned to negative rated employers (Schedule II and III) is 0.5% for the second quarter of 2023 (1% in the first quarter of 2023). As a result of the foregoing, rates will be reduced by 0.50% for Q2 2023.
The bill aims to assist employers affected by COVID-19. Specifically, the bill will assign the following unemployment tax rate tables through fiscal year 2024:
Table C (rates range from 0.5% to 5.8%) for fiscal year 2022 (from July 1, 2021 through June 30, 2022);
Table D (rates range from 0.6% to 6.4%) for fiscal year 2023 (from July 1, 2022 through June 30, 2023), unless calculations call for a lesser table to be in effect; and
Table E (rates range from 1.2% to 7.0%) for fiscal year 2024 (July 1, 2023 through June 30, 2024), unless calculations call for a lesser table to be in effect.
The New Mexico 2023 SUI tax rates are dated November 22, 2022. The Reserve Factor increased to 3.3445 and the Excess Claims multiplier remained 10%. Rates range from 0.33% to 6.40%. Due to legislation, the state has not used benefit charges and taxable payroll from March 1, 2020 through June 30, 2021 in the rate computation. The taxable wage base increased from $28,700 to $30,100 in 2023.
New York Announcement Relating to Future Wage Bases
New York has announced that future unemployment taxable wage base 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.
For 2023, the rate schedule in effect is the column labeled “Less than 0%.” In this column, the rates range from 1.5% to 4.1% for positive-balance employers and from 5.2% to 8.9% for negative-balance employers. The full range of rates with the normal, subsidiary, and the Reemployment Service Fund taxes for 2023 are 2.1% to 9.9%. New employers pay a total rate of 4.1%, including the subsidiary tax rate of 0.625% and the reemployment tax of 0.075%. The taxable wage base increased from $12,000 in 2022 to $12,300 in 2023.
The North Carolina 2023 SUI tax rates were issued on November 14, 2022. The state uses a basic rate computation, based on a Standard Contribution Rate, to calculate the Unemployment Insurance contribution rate. The Standard Contribution Rate remained 1.9%. The rates range from 0.06% to 5.76%. The taxable wage base increased from $28,000 to $29,600.
North Dakota’s 2023 contribution rates will range from 0.08% to 1.25% for positive-balance employers and from 6.26% to 9.97% for negative-balance employers. The new employer rate for positive-balance non-construction employers will be 1.13% and the new employer rate for negative-balance non-construction employers will be 6.26%. The new employer rate for both positive-balance and negative-balance construction employers will be 9.97%. The 2023 taxable wage base will be $40,800 (from $38,400 in 2022).
2023 unemployment insurance tax rates in Ohio will range from 0.3% to 9.8%. The tax rate for new employers in the construction industry will rise to 5.6%, up from 5.5% in 2022. The tax rate for all other new employers will remain 2.7% in 2023. The tax rate for delinquent experienced employers will rise to 12.9%, compared to 12.8% in 2022. Ohio’s taxable wage base will be $9,000 in 2023, unchanged from 2022.
Oklahoma 2023 SUI tax rates were issued on September 30, 2022. The state experience factor, conditional factor and technology fund assessment will remain the same in 2023 as it was in 2022. Rates for Oklahoma employers will range from 0.3% to 9.2%. These 2023 rates will not be available on the state’s tax portal until January 1, 2023. The 2023 wage base will increase from $24,800 in 2022 to $25,700 in 2023.
The legislation modifies requirements regarding the calculation and payment of unemployment insurance taxes to provide employers immediate and long-term relief. The legislation:
Provides that the experience rating used to determine an employer’s 2020 tax rate will also be used in 2022, 2023, and 2024;
Reduces fund adequacy percentages used to determine tax rate schedules; and
Extends from 10 years to 20 years the look-back period used to determine Unemployment Compensation Trust Fund solvency level and provides that 2020 and 2021 are not included in the 20-year look-back period.
The Oregon 2023 SUI tax rates were issued on November 15, 2022. The rate schedule decreased from Schedule III to II, which will result in most rates decreasing. 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 0.09% Supplemental Employment Department Administration Fund rate is in effect for all four quarters (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. With HB 3389 (see above), the 2023 statewide UI tax schedule is II, and the state is using the 2020 computation period to compute 2023 rates. Therefore, the computation period will run from July 1, 2016 to June 30, 2019. The rates range from 0.70% to 5.40%. The taxable wage base increased from $47,700 to $50,900 in 2023.
Unemployment tax rates for experienced employers will continue to range from 1.4190% to 10.3734% in the 2023 tax year. These rates include a 9.2% surcharge and 0.6% additional contribution tax. The interest factor will not be in effect for 2023. Delinquent employers pay a basic rate that is 3.0% higher. The new non-construction employer rate will remain at 3.8220% in 2023 and the new construction employer rate will be 10.5924% in 2023. The new employer rates only include the 9.2% surcharge as the additional contribution tax does not apply to new employers. The taxable wage base will continue to be $10,000 in 2023. Employees must also make unemployment tax contributions. The employee unemployment tax withholding rate will increase to 0.07% in 2023 (0.06% in 2022). This withholding is deducted from all of the employee's taxable wages, not just up to the taxable wage base limit.
Contributory employers that have a sporadic employment history (having filed "zero" returns during each quarter of the last four years ending on the computation date or having been inactive for less than five years) are assigned a standard rate of 6.4968% for 2023 (up from 6.1916% for 2022) if positive balanced, or 10.6464% (10.1968% for 2022) if negative balanced, while the base SUI tax rate for experienced-rated employers for 2023 ranges from 1.4190% to 10.3734% (up from 1.2905% to 9.9333% in 2022).
Under prior law, a business must have made SUI contributions for at least one quarter in 2020 or 2021 to qualify for a potentially lower experience rate for fiscal year 2021. SB 1083 amends Pennsylvania SUI law by clarifying that a business may qualify for a potentially lower experience rate if it made no SUI contributions because it was temporarily shut down for an extended period due to the Governor’s COVID-19 disaster declaration.
Specifically, the law states that if an employer temporarily ceased operations as a result of the emergency disaster declaration under 35 Pa.C.S.A. Section 7301(C) at any time after March 6, 2020 and prior to July 1, 2021, the employer will be deemed to have paid SUI contributions during fiscal year 2021 provided that the employer actually paid SUI contributions for one or more quarters in either the fiscal year ending on June 13, 2021 or in the immediate preceding fiscal year ending on June 13, 2020.
The Puerto Rico 2023 SUI tax rates were dated December 15, 2022. For 2023, the Schedule increased from A to G. Rates range from 3.4% to 5.40%. Included in the rate, all employers, except those assigned the maximum rate (5.4%), are assessed a surtax of 0.1% - 1.0% depending on their assigned rate. This surtax is included in the total rate. The contributions for this rate are calculated as a separate item on the quarterly contribution report. The taxable wage base remains $7,000.
The bill contains a provision that appropriates $100 million to the state's unemployment trust fund to reduce unemployment tax rates in 2023. Specifically, the language in the bill instructs the Rhode Island Director of Labor and Training to allocate the appropriations to the employment security fund prior to determining the experience rate for each eligible employer for calendar year 2023. Like in several other states, unemployment tax rates and schedules may be determined based on the balance in the unemployment trust fund. In Rhode Island, a series of nine experience rating schedules have been set by law under which employer rates can range from a low of 0.6% in Schedule A to a high of 10.0% in Schedule I. For tax year 2022, unemployment tax rates were determined under Schedule H.
The unemployment tax rates for experienced employers will move down to Schedule G for 2023. Rates range from 1.1% to 9.7% in 2023. The new employer rate will decrease from 1.19% to 1.09% in 2023. All of the above rates include a 0.21% job development assessment. The taxable wage base will increase from $24,600 to $28,200 in 2023 for most employers. The taxable wage base will also increase for employers in the highest tax rate bracket to $29,700 in 2023.
The 2023 tax rates for businesses will decrease or remain unchanged from their 2022 levels. This is the 10th year in a row that UI contribution rates will remain unchanged or decrease. For 2023, rates will be lower for rate classes 2-19 by an average of 15.5% compared to 2022 levels. Employers may be assigned different rate classes for 2023, depending on unemployment claim activity. For 2023, there will be no solvency surcharge imposed. The effective new employer tax rate (which is employer Tax Rate Class 12) for 2023 will be 0.450%, down from an effective rate of 0.550% in 2022. Also, for 2023, the total maximum tax rate, which is assessed on employers in Rate Class 20, remains at 5.46%
The state has announced that there will be no changes to the unemployment tax rate schedules for 2023. Experienced employer unemployment tax rates will continue to be determined under Schedule B. Rates range from 0% to 9.3%, including an investment fee that ranges from 0% to 0.55% depending on an employer's reserve ratio. Experienced employers with a reserve ratio of less than 2.25% must also pay a 0.02% administrative fee on wages. New non-construction employer rate for the first year of business is 1.2%, and 1% for the second and third years of business. New construction employers in their first year of business will pay 6.0%. New construction employers in their second and third year of business will pay 3.0%. If a new employer has a negative account balance after their first year they may remain at the 1.2% and 6.0% rates respectively. The new employer rates include a 0.55% investment fee. The 2023 taxable wage base will remain at $15,000.
New legislation signed on February 1, 2023, will cut employer contributions to unemployment by 0.5%. Specifically, the legislation creates a new tax schedule when the balance in the Unemployment Trust Fund at the end of the fiscal year is at or above an average high-cost multiplier (AHCM) of 1.5. An AHCM of 1.0 means enough funds exist to cover a full year of benefits during a recession. Currently, employer tax rates are based on the AHCM of the fund at the end of each fiscal year. Additionally, the bill adjusts the trigger point for a surcharge – this is an additional tax imposed when the balance of the fund drops below $11 million. The surcharge trigger will no longer be tied to a dollar amount, but to an AHCM ratio. Through December 31, 2023, Schedule A (rates range to 9.45%) is in effect when the AHCM is less than 1.60 and Schedule B (rates range to 9.3%) is in effect when the AHCM is greater or equal to 1.60. Beginning January 1, 2024, Schedule A (rates range to 9.45%) is in effect when the AHCM is less than 1.60 and Schedule B (rates range to 9.3%) is in effect when the AHCM is less than 1.5 and greater or equal to 1.3, and Schedule C (rates range to 8.80%) is in effect when the AHCM is greater or equal to 1.5.
Effective July 1, 2022 through December 31, 2022, 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. Effective January 1, 2023 to June 30, 2023, Premium Rate Table 6 will continue to be in effect.
The employer SUI tax-rate schedule continues to be the lowest possible for fiscal year 2023 (July 1, 2022, to June 30, 2023). Because the SUI trust fund balance exceeded $1 billion as of June 30, 2022, SUI tax rates for experience-rated employers will continue to range from 0.01% to 10.0% on Premium Rate Table 6. Note that though SUI tax rate notices are issued on an annual fiscal-year basis, the SUI tax-rate schedule may change as of January 1, 2023, increasing SUI tax rates for the first and second quarters of 2023, if the level of the state's UI trust fund balance falls below $1 billion as of December 31, 2022.
Employers continue to pay SUI taxes on a taxable wage base of $7,000 for tax year 2022. The 2023 wage base will be based on the UI trust fund balance as of December 31, 2022. If the UI trust fund balance continues to exceed $1 billion at that time, the taxable wage base will remain at $7,000 for calendar year 2023.
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.
Contribution rates in Texas range from 0.23% to 6.23% for 2023. Also, for 2023, the replenishment ratio is 1.27, the replenishment tax rate is 0.13%, and the obligation assessment ratio is 0.00. The employment and training investment assessment rate in 2023 is 0.10%. The 2023 Deficit Tax Ratio is 0.00 percent. There is no Deficit Tax Rate for 2023 nor is there an Interest Tax Rate assessed for 2023. The taxable wage base remains at $9,000.
The bill sets limits on the social contribution rate and reserve factor for the next three years. For calendar year 2022 only, if the calculation of the social contribution rate under Subsection (2)(A) is greater than 0.003, the social contribution rate for that calendar year is 0.003. For calendar years 2023 and 2024 only, if the calculation of the social contribution rate under Subsection (2)(a) is greater than 0.004, the social contribution rate for that calendar year is 0.004. For calendar year 2022 only, the division may not set the reserve factor to be more than 1.1500; and for calendar years 2023 and 2024 only, the division may not set the reserve factor to be more than 1.2000.
Unemployment tax rates for experienced employers will continue to range from 0.3% to 7.3% in 2023. New employer rates vary by industry, except new, out-of-state contractors are assigned the 7.3% maximum tax rate. The social cost rate will remain 0.3% in 2023. For 2023, the reserve factor is 1.10. The taxable wage base will increase from $41,600 to $44,800 in 2022.
Effective July 1, 2022, the Vermont contribution rate schedule for employers will move from Schedule III to Schedule I. Rates under Schedule I range from 0.4% for Rate Class 0 to 5.4% for Rate Class 20. In addition, the taxable wage base will decrease from $15,500 in 2022 to $13,500 in 2023.
The Virginia 2023 SUI tax rates were dated December 9, 2022. The Fund Balance Factor increased from 50% to 55%, the Fund Building Charge decreased from 0.20% to 0.00%, and the Pool Cost Charge remained 0.03% for the 2023 rate year. The rates range from 0.13% to 6.23%. Benefits were not charged to employers for fiscal years ending July 1, 2020 and July 1, 2021 respectively. However, if the 2021 rate is lower than the calculated 2023 rate, revised rates were issued to affected employers assigning the lower rate for 2023. The taxable wage base remains at $8,000.
The Virgin Islands 2023 SUI tax rates were dated January 16, 2023. Rates range from 2.50% to 6.00% with the majority being the minimum 2.50%. The New Employer Rate is 2.00% The taxable wage base is $30,200 for 2023 (from $30,800 for 2022).
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.
The Washington 2023 SUI tax rates are dated December 9, 2022. The Flat Social Cost rate, which determines the tax rates on the table, increased from 0.50% to 0.60% for all rate classes. Rates range from 0.27% to 6.03% except for penalty rates. The penalty rates range from 1.25% to 8.15%. The state introduced a new table with lower rates for employers with less than 10 employees. This was put into effect with the passage of SB 5873, which reduces the 2023 social tax rates for employers who report 10 or fewer employees during the fourth quarter of 2021. The taxable wage base increased from $62,500 in 2022 to $67,600 in 2023.
Unemployment tax rates for experience rated employers continue to range from 1.5% to 8.5% in 2023. Employers with a debit balance (paid out more in unemployment benefit claims than paid in unemployment tax) are assessed a surtax of 1.0%. The tax rates for these employers range from 6.5% to 8.5%, including the surtax. The new employer rate remains at 2.7%, except that foreign businesses engaged in the construction trades will pay 8.5%. The wage base remains $9,000 in 2023.
The legislation locks unemployment tax rate Schedule D in effect through 2023. Contribution rates, including a solvency surcharge, for Schedule D range from 0% to 12% for employers with payroll under $500,000, and from 0.05% to 12% for employers with payroll of $500,000 or more. Schedule D is the lowest contribution rate schedule. Typically, the unemployment tax rate schedule depends on the level of the state's unemployment trust fund. This bill requires Schedule D be in effect regardless of the trust fund level as of June 30, 2021 and June 30, 2022. However, the bill provides that it applies only if the 2021-23 budget bill, as enacted, provides for transfers of $60,000,000 in each of fiscal years 2021-22 and 2022-23.
The Wyoming 2023 SUI tax rates were dated December 30, 2022. The total of all three constant factors used in the rate computation remained 0.00% for most employers and 0.14% for employers with zero benefit charges, resulting in lower rates. Rates range from 0.00% to 8.50%. The taxable wage base has increased to $29,100 for 2023 (from $27,700 for 2022).
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. While it is prudent for employers to be aware of the direction of future SUI tax rates, it is more important than ever for employers to take their own actions to help mitigate future increases 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 lower SUI tax rates (e.g., voluntary contributions, joint account formation, negative write-off payments, payroll variation elections, etc.)
To keep up-to-date, please visit our Employer Unemployment Insurance Resource Center. The site includes a 2023 Tax Guide intended to assist employers in identifying potential risks associated with increases in SUI tax costs from 2022 to 2023 (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.
Per Average Employer Contribution Rates by State issued by the U.S. Department of Labor.
Per data obtained from the FiscalData (an official website jointly created by the U.S. Department of the Treasury and the Bureau of the Fiscal Service).
Per respective Unemployment Insurance Data Summary reports published by the U.S. Department of Labor and TreasuryDirect (an official website of the U.S. Department of Treasury).
Per Comparison of State Unemployment Insurance Laws issued by the U.S. Department of Labor, Employment and Training Administration.
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.
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.
About the Author
Job Title: Managing Director, Employment Tax Consulting
Tom Towson is a Certified Public Accountant. He graduated cum laude from Missouri State University with a Bachelor of Science in accounting and from the University of Missouri — St. Louis with a master’s degree in accounting (emphasis in taxation). He joined Equifax Workforce Solutions in 2011 and specializes in employment tax matters (primarily focused on state unemployment insurance) associated with mergers and acquisitions, tax, strategic planning, and helping develop leading practices.
Before joining Equifax, Mr. Towson served as Chief Financial Officer of a St. Louis-based manufacturing firm, managing all aspects of the company’s financial matters, including income and employment tax functions during his five-year tenure. He spent the prior 16 years with a St. Louis-based public accounting firm where he was the shareholder in charge of taxation services.