By Tom Towson
Last updated: June 30, 2022 (changes since last update on May 6, 2022 will begin with **NEW**)
In this article:
Potential Impact of COVID-19 on 2021 SUI Tax Rates
Solvency of the SUI System
Average High Cost Multiple
Minimum Adequate Level of Financing
State Trust Fund Balances
Federal Title XII Advances
FUTA Credit Reductions
Annual Taxable Wage Bases
Insights Gained from the Great Recession
Legislative Actions Impacting 2022 SUI Tax Rates
Extension of Non-Charging of Benefits into 2021
American Rescue Plan Act of 2021
State Actions Impacting 2022 SUI Tax Rates
Most states acted in mid to late 2020 and early 2021 in response to the COVID-19 pandemic to help mitigate some of the financial risks (i.e., increases in SUI tax costs) potentially impacting employers in calendar year 2021. The most pervasive of these actions related to the non-charging of COVID-19 related benefits not funded by the federal government. In addition, states took other actions to help mitigate risks, including:
Maintaining 2020 tax rate tables and rating calculation factors
Removal of non-COVID related benefit charges from the rating calculation (or the shortening of the “look-back” period to exclude benefits charges and/or taxable payroll from the rating calculation)
Lowering or removal of surcharges relating to trust fund solvency or socialized charges (i.e., those benefits not charged to specific employer accounts)
Cash infusions into trust funds from sources other than tax contributions (e.g., CARES Act Coronavirus Relief Funds)
Maintaining 2020 annual taxable wage base limits
Establishment of special tax credits
Deferral of the tax payment due dates
The above is not intended to suggest that all states acted to mitigate risk. Some states allowed their rating calculations, surcharges, and wage bases to adjust by operation of law or policy, which generally increased SUI tax rates. Even in those states that enacted non-charging of COVID-19 related benefits, many employers realized significant increases in calendar year 2021 SUI tax rates.
A good example of this is New York. The state has not charged employers for COVID-19 related benefits since March 9, 2020, but because its trust fund had been depleted, the rate table moved to the maximum allowed under law (i.e., moved six rate tables). The minimum rate from 2020 to 2021 went from 0.60% to 2.10% (a 256.0% increase) and the maximum rate went from 7.90% to 9.90% (a 27.5% increase). Per an employer notification issued by the New York Department of Labor, the rate table change “means unemployment rates have adjusted upward for all employers in 2021”. See the Equifax 2022 Tax Guide for additional state-specific details. Barring a law change, New York is not expected to charge employers for benefits in 2021, which are used to calculate 2022 SUI tax rates.
There are two primary solvency measures used by the U.S. Department of Labor, the Average High Cost Multiple (AHCM) and the Minimum Adequate Level of Financing (MALF).
The AHCM is a standard measure of the solvency of the SUI system using a single factor, a state’s trust fund balance at a point in time. A 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, 2022, 37 states were not considered adequately funded under this measure, down from 40 states the year prior. (1)
Average High Cost Multiples
The MALF is a measure of solvency using multiple factors, a state’s average SUI tax rate and trust fund balance at a point in time. In an attempt to measure the adequacy of a state’s level of taxation it is necessary to arrive at a standard level of taxation which can be used for comparison. A comparison can be made between a state’s average tax rate for the year against the MALF. The MALF is calculated as the tax rate equal to the amount needed to cover a state’s total benefit payments (average level of last six years) plus a solvency amount. The solvency amount is the difference between a state’s net current trust fund level and the recommended minimum adequate level (a trust fund level equivalent to a 1.0 AHCM divided by five). The percentage difference between a state’s average tax rate and the Minimum Adequate Financing Rate shows how a state’s current level of financing compares to the determined adequate level. A large negative number corresponds to a level of financing that is well below adequate. This measure can be combined with the AHCM to suggest that a state may have an inadequate level of taxation if they have a large negative difference from the adequate financing rate and a low level of solvency.(2)
The average SUI tax rate in 45 states was below a calculated Minimum Adequate Financing Rate Target as of January 1, 2022, up from 30 states the year prior.
Percentage Difference Between State Average Tax Rate and a Minimum Adequate Financing Rate
State trust fund balances are the primary driver of SUI tax rates. As such, particular attention should be paid to these balances as an indicator of where rates will be headed in the future.
The following graphic compares net trust fund balances (trust fund balance net of Title XII advances, discussed further below) from January 1, 2020 to March 31, 2022 by state. (3) Overall, net trust fund balances declined significantly during this period, but are beginning to rebound.
Quarterly State Trust Fund Balances by State (descending order by state as of March 31, 2022)
As depicted in the following graphic, net trust fund balances 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 COVID-19 (i.e., $12.34 billion more solvent). By the end of Q1 2022, trust fund balances rebounded and now a net positive, as a result of tax contributions exceeding benefit payments and states appropriating funds, including, federal funds under the American Recovery Plan Act of 2021 discussed further below. (4)
**NEW** Historical Net Trust Fund Balances
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 governor of any state may request a loan under Title XII of the Social Security Act. This is typically done when a state’s reserves are inadequate to pay anticipated future unemployment benefits. As of June 22, 2022, the following states had outstanding Title XII advances. (3)
As of March 31, 2021, 20 states had outstanding advances totaling approximately $50.50 billion. As of June 22, 2022, 7 states had outstanding advances totaling approximately $29.90 billion. This is a $20.60 billion reduction since the highest loan levels experienced as a result of the COVID pandemic.
During the Great Recession, a number of states issued bonds, using the proceeds to repay Title XII advances. In addition, states may earmark allocated funds from ARPA (the American Rescue Plan Act of 2021) to repay federal advances (see explanation below).
The temporary waiver of interest on Title XII loans provided in the Families First Coronavirus Response Act ended on September 6, 2021. As such, states with outstanding advances will once again begin to accrue interest daily, which is payable on September 30th of each year (a condition of meeting federal conformity and compliance requirements). See the section titled Interest Surcharges below for additional information on Title XII loan interest.
If a state has an outstanding loan balance on January 1 of two consecutive years and has not repaid the balance by November 10 of that second year, employers in the state are at risk of losing a portion of their FUTA tax credit for that year. The FUTA tax credit starts at 5.40% and is reduced by 0.30% (known as the FUTA credit reduction) for each year the loan remains outstanding beyond the second year. The FUTA tax rate is a net 0.60% because of the FUTA tax credit [6.00% (gross FUTA tax rate) - 5.40% (FUTA tax credit) = 0.60%)]. (5)
In the first year of the FUTA tax credit loss, the net FUTA tax rate increases from 0.60% to 0.90%. The net FUTA tax rate can increase further, in increments of 0.30% per year, if the loan remains outstanding in subsequent years.
Employers in states that accept federal advances during calendar year 2020 will not be subject to FUTA (Federal Unemployment Tax Act) credit reductions until 2022. The first January 1 occurred on January 1, 2021. The second January 1 will occur on January 1, 2022. Should a state’s Title XII advances remain outstanding on November 10, 2022, employers in the state will be subject to a 0.30% increase in the FUTA tax rate, from 0.60% to 0.90%, for the entire 2022 calendar year.
For 2021, the only taxing jurisdiction subject to a FUTA credit reduction is the Virgin Islands, per the U.S. Department of Labor Division of Fiscal and Actuarial Services. With the 3.3% credit reduction, employers in the jurisdiction will pay FUTA tax at a rate of 3.9%.
For 2022, there are 7 states (including the Virgin Islands) that have had outstanding Title XII advances on January 1, 2021 and January 1, 2022. If these states do not repay the advances prior to November 10, 2022, they will be subject to a 0.3% reduction in their FUTA credit (i.e., the FUTA tax rate will increase by 0.3%).
The following provides some of the recently introduced legislation that could impact Title XII advances and FUTA credit reductions:
This bill would appropriate $19.3 billion from the General Fund to the Employment Development Department (EDD) for the purpose of repaying all advances from the federal unemployment account no later than September 30, 2022. The bill failed passage during the initial committee hearing.
The bill would make a one-time transfer of $7.25 billion from the General Fund to the Unemployment Fund for the purpose of paying down outstanding debt in that fund. The bill has been "held under submission" within committee.
The bill would require the state treasurer to transfer $1.1 billion from the general fund to the unemployment compensation fund on July 1, 2022 to restore the balance of the fund to its pre-coronavirus (COVID-19) pandemic level. The legislation would also require the state director of the division of unemployment insurance to repay the federal government for $1.014 billion of federal unemployment advances in responding to the COVID-19 pandemic. The legislation notes that the repayment of the federal unemployment advance will not change the unemployment tax rate schedule for 2023 as the fund balance determines the future rate on June 30, 2022. On May 3, 2022, the bill was postponed indefinitely.
The bill seeks to appropriate funds from the general fund to be deposited into the Unemployment Trust Fund. The bill does not provide a specific amount.
The bill would allocate available funds from federal assistance to the unemployment compensation fund in order to pay back outstanding federal advances for fiscal year 2022, 2023, and 2024. Additionally, it requires that the Commissioner of Labor and Workforce Development submit a report regarding the fund's solvency to the state legislature that includes information regarding estimates on the total funds needed to be deposited by the March 31 trigger to avoid an increase in employer rates. As of May 3, 2022, New Jersey repaid its Title XII advances, but may have a need to take additional advances in 2022, which could subject the state to FUTA a credit reduction in 2022.
The bill would establish an unemployment insurance solvency reserve fund that may include federal pandemic recovery funds and non-recurring state funds derived from settlement proceeds. The amounts of the fund may be used to pay outstanding federal advances and related interest assessments.
As referenced above, some states have the authority under state law to issue bonds to avoid or payoff federal advances. In these states, special taxes may be assessed to pay off the bond and any costs associated with the bond. Additionally, when a state takes out federal advances the funds are subject to interest. States may not pay interest from the state’s unemployment fund and several states have established special surcharges to pay the interest cost.
In December 2021, the state financial officers of eight states (Colorado, Connecticut, Illinois, Massachusetts, Minnesota, New Jersey, New York, and Pennsylvania) sent a joint letter to the U.S. Department of Treasury requesting the government waive interest on the federal unemployment advances. Interest was previously waived under a provision of the Consolidated Appropriations Act (CAA), but the provision expired on September 6, 2021. Since then, interest has been accruing on the loans. The signatories argued that the waiver deadline of September 6 was proposed under the belief the pandemic would be over and states would be in economic recovery mode. The extension date of September 30, 2022 would apply the interest waiver to loans retroactively to the original waiver date of September 6, 2021, ensuring that loans taken in that time frame remain interest-free.
The following table provides additional details on states that have the ability under existing law to provide for loan and interest repayment surcharges.
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. (6) 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%.
The following table provides the 2022 annual taxable wage bases by state:
The logical leading indicator of potential increases in SUI tax rates is the unemployment (jobless) rate. As the unemployment rate increases, net trust fund balances typically decrease. The correlation is almost immediate. This is because when more unemployment claims are filed, more benefits are paid to claimants, which are charged to the state trust funds. This can be demonstrated by looking back at the Great Recession, which lasted from December 2007 to June 2009. (7)
Correlation of Historical Unemployment (Jobless) Rates to Net Trust Fund Balances (8)
The Great Recession caused a slow increase in initial unemployment claims. In contrast, there was a sharp spike in claims due to the COVID-19 pandemic, which continues to put stress on the unemployment system.
As state trust funds are depleted during a period of increasing or higher levels of unemployment, SUI tax rates have historically increased. 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 graphic, 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. From 2020 to 2021, the average SUI tax rate increased from 1.72% to 1.92% (11.6%) and the increase is expected to continue in the near-term.
Correlation of Historical Average SUI Tax Rates to Net Trust Fund Balances (9)
As mentioned above, the most meaningful action taken by most states to mitigate the financial risks associated with the COVID-19 pandemic was the non-charging of COVID-related regular unemployment benefits. In some states, the non-charging provisions have expired. In other states, the non-charging provisions continue or have been extended into 2021.
Even if the non-charging provisions expired in 2020, they can still have a positive impact on 2022 rates since most states' rating calculation periods begin July 1, 2020 and end on June 30, 2021. For those states that have extended non-charging provisions beyond June 30, 2021, 2023 SUI tax rates could be positively impacted. This is not to suggest that SUI tax rates for 2022 and 2023 will be lower than those of 2021, but it could mean that they will increase less than they otherwise would without such non-charging provisions.
The COVID-19 regular unemployment benefits not charged to specific employers will be “socialized” and come out of state trust funds. This in turn can trigger surcharges, the “great equalizer.” It is important for employers to continue auditing benefit charge statements to help ensure that benefits that should not be charged, are not charged. Equifax has prepared a State Claims Resource Guide summarizing certain COVID-19 related claims information, including states with “non-charging of benefit” provisions.
The American Rescue Plan Act of 2021 (ARPA) is a $1.9 trillion economic stimulus bill passed by Congress and signed into law by the President March 11, 2021 to speed up the country's recovery from the economic and health effects of the COVID-19 pandemic and the ongoing recession.
On May 11, 2021, the Department of Treasury issued an Interim Final Rule to implement the Coronavirus State and Local Fiscal Recovery Funds established under the American Rescue Plan Act of 2021 (ARPA). Recipients of funds (e.g., the states) may make deposits into unemployment trust funds up to the level needed to restore the pre-pandemic balances of such account as of January 27, 2020 or to pay back advances received under Title XII for the payment of benefits between January 27, 2020 and date the Interim Final Rule becomes effective.
Since the level of state trust funds is a primary driver in determining SUI tax rates, the use of funds to replenish depleted trusts can have positive implications for employers. This of course is dependent on how the states decide to use the funds available to them. Should a state decide to improve the solvency of its trust fund, this could mitigate anticipated future increases in SUI tax rates. In addition, if a state uses the funds to repay Title XII advances prior to January 1, 2022, this could help avoid FUTA credit reductions in calendar year 2022. Also, since the waiver of interest on Title XII advances ended on September 6, 2021, the elimination of some or all of the Title XII advances could help avoid the payment of interest, which is often passed on to employers. This assumes that the Continued Waiver of Interest on State Unemployment Loans during the Pandemic Act - does not pass.
State and Local Fiscal Recovery Funds must be appropriated by December 31, 2024 and be spent by December 31, 2026. The total allocation of funds is $195.3 billion. However, since states may only appropriate these funds to restore unemployment trusts to pre-pandemic levels, the full amount of available federal funds may not be used to improve solvency. To date, 19 states have appropriated just under $16.15 billion in ARPA funds, as follows:
Allocation of ARPA Funds (10, 11)
The above does not yet reflect recently enacted Illinois SB 2803 which appropriates $2.7 billion in ARPA funds to pay down its outstanding Title XII advances.
In addition to the above, on April 19, 2022 Illinois passed SB 157 which appropriates $2.7 billion in ARPA funds for the repayment of the federal Title XII advances to the state's unemployment trust fund. As of June 28, 2022, the state has yet to repay its Title XII advances.
The following contains examples of actions taken by states impacting 2022 SUI tax rates:
Alaska New Option to Reduce Unemployment Tax Rate
The Alaska Department of Workforce Development has announced a new option for employers to reduce their unemployment tax rate. This new option is designed to help employers minimize the COVID-19 pandemic's effect on unemployment tax rates by using the Emergency Option Form. Examples of COVID-19 unexpected payroll changes are: (1) an increase in wages due to providing essential services; (2) decreases from layoffs or a reduction in hours worked; or (3) unpaid leave for mandatory, self-imposed quarantine, etc.
Alaska Announcement Relating to 2022 Unemployment Tax Rates
Contribution rates in Alaska for 2022 range from 1.00% to 5.40% for eligible employers, based on payroll decline experience. For 2022, the average benefit cost rate used to determine the rates is 0.020739 and the actual calculated trust fund solvency adjustment is 0.029832. The average tax rate is 1.53% and the employee tax rate is 0.56%. The standard rate is 3.00%. Rates for new employers depend on NAICS classification. The taxable wage base for 2022 is $45,200.
Arizona Announcement Relating to Non-Charging of Benefits
The Arizona Department of Economic Security (DES), in response to the COVID-19 pandemic, has not charged unemployment benefits to employers’ experience rating accounts since March 8, 2020. DES will resume charging employers’ experience rating accounts for initial claims for unemployment insurance with an effective date on or after September 5, 2021. For initial claims with an effective date prior to September 5, 2021, employers will not be charged for the duration of the claim.
Arizona Announcement Relating to 2022 Unemployment Tax Rates
For 2022, most positive reserve ratio balance employers, except new employers, will receive rate increases. Rates for positive reserve ratio employers will range from 0.08% to 10.08%. An employer with a reserve ratio of zero pays at a rate of 10.46%. Negative ratio employers will pay rates ranging from 11.05% to 20.93%. New employers will continue to pay 2.0%. The taxable wage base remains $7,000.
Arkansas HB 1049
The new law stops any further increase in the unemployment taxable wage base in 2022. The wage base fluctuates with the balance in the state's unemployment trust fund. If the balance is lower, the wage base increases. The maximum amount the wage base can be is $12,000. For 2021, the wage base was $10,000. It was $7,000 in 2020. House Bill 1049 states that the wage base may not increase to more than $10,000 in 2022. It also notes that the wage base may not decrease below $7,000.
Arkansas Announcement Relating to 2022 Unemployment Tax Rates
Unemployment tax rates for experienced employers will range from 0.1% to 5.0%. The rate for deficit employers (6.0%) is subject to a 2.0% increase every two-years for continued deficit rate status, to a maximum of 14.0%. The new employer tax rate will remain at 3.1% in 2022. The unemployment stabilization tax rate remained at 0.2% for 2022. The taxable wage base will continue to be $10,000 in 2022.
California Announcement Relating to 2022 Unemployment Tax Rates
Unemployment tax rate Schedule F+ (Schedule F plus a 15% emergency surcharge) will continue to be in effect in the 2022 tax year. Rates range from 1.5% to 6.2%. The new employer rate will remain at 3.4%. The above rates do not include the employment training tax (ETT) rate, which will remain at 0.1% for all positive balanced employers. The taxable wage base will remain at $7,000.
California AB 103
The Bill provides for the non-charging of unemployment insurance benefits to tax-rated employers. California will not charge employers’ reserve accounts for unemployment claims related to COVID-19, unless the employer or the agent of the employer was at fault per section 1026.1 of the California Unemployment Insurance Code. The non-charging provisions apply to benefits for weeks ending February 1, 2020 through the week ending September 4, 2021.
Colorado SB 20-207
The legislation incrementally increases Colorado's unemployment taxable wage base to $30,600 by calendar year 2026. The wage base will remain at $13,600 through 2021. It will then increase to $17,000 in 2022, $20,400 in 2023, $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.
As a counterbalance to increases in wage bases, the legislation requires that employers not be assessed a solvency surcharge for calendar years 2021 and 2022, even if the unemployment trust fund balance falls low enough to warrant an increase in the unemployment tax rates. Also, the bill allows the state to use funds received by the U.S. Department of Labor under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to bolster the trust fund. This move can help to lower the overall future-assigned unemployment tax rates.
Colorado Announcement Relating to 2022 Unemployment Tax Rates
The Colorado Department of Labor and Employment (DLE) has posted on its website that unemployment tax rates will be determined under the state's highest schedule in 2022. For experience-rated employers, tax rates will range from 0.75% to 4.41% for those with a positive-rating and from 5.68% to 10.39% for those with a negative-rating. In 2021, unemployment tax rates ranged from 0.71% to 9.64% for experience-rated employers. The DLE has also noted that the process of not charging employer unemployment accounts for COVID-19 pandemic-related unemployment benefits has taken longer than anticipated. As such, the DLE ran a program to automatically remove these charges from accounts in an effort to prevent these charges from affecting an employer's experience rate for 2022. In addition, the DLE has announced that 2022 unemployment tax rate notices to employers will be delayed due to the volume of work to determine correct pandemic claims charging. The DLE notes that this will not impact the timing of the 2022 unemployment tax payments or the amount of time to protest a tax rate. The DLE suggests accessing MyUI Employer, starting in mid-November 2021, to access 2022 unemployment tax rate information prior to the mailing.
**NEW** Colorado SB 22-234
The law amends Colorado's unemployment law as follows:
Bonds: Three sections of the bill (1, 7 and 9) amend the existing authority of the Colorado Division of Unemployment Insurance to issue bonds by clarifying that the Division may issue bonds through the state Treasurer and granting the Division the authority to levy bond assessments.
Benefits: Section 2 of the bill makes the temporary increase in partial unemployment benefits permanent. Section 3 of the bill repeals the requirement that an individual wait at least one week before becoming eligible for unemployment compensation (effective when the unemployment fund reaches a balance of at least $1 billion).
Dependent allowance. Section 4 requires the Division to study how to implement a dependent allowance for individuals receiving unemployment benefits.
Notifications: Section 5 requires an employer to provide an employee with certain information about unemployment compensation upon the employee's separation from employment.
Surcharge: Section 6 extends the hold on an employer's solvency surcharge through calendar year 2023.
Repay loans. Sections 8 and 12 require the state treasurer to transfer $600 million to a newly created fund with money received by Colorado through the federal American Rescue Plan Act (ARPA) to be used only to repay outstanding balance of federal unemployment advances.
Recovery benefits: Sections 4 and 10 award grants to one or more third-party administrators for the purpose of providing recovery benefits to eligible individuals. The grants to the third-party administrators and the recovery benefits are funded through.00035 of the premium each employer is required to submit to the division. There is certain criteria to be met for an individual to be eligible to receive recovery benefits.
Connecticut HB 6633
The new 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% (currently, 0.5% to 5.4%), 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% (currently at 1.4%). 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. Currently, the lookback period is the 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.
Connecticut Announcement Relating to the Federal Title XII Interest Assessments
The Connecticut Department of Labor has announced that there will be no special assessment on employers for the state's outstanding federal unemployment loan interest. Connecticut's unemployment trust fund was depleted in August 2020. As a result, the state borrowed funds from the federal government to continue to pay benefits. Typically, there is interest on federal unemployment loans, which is due by September 30. The Families First Coronavirus Response Act waived this interest until September 6, 2021. The calculated interest on Connecticut's loans from September 7, 2021 through September 30, 2021 is expected to be approximately $1 million. The state usually imposes a special assessment on employers to pay for this interest. However, the state will pay the interest due on September 30.
The Department added that the state is expected to become a FUTA tax credit reduction state for the 2022 tax year. This is because the federal unemployment loans will have been outstanding for two consecutive years. As a result, the 5.40% FUTA credit reduction on the 6.0% FUTA tax rate will be reduced by 0.30% for the 2022 tax year. This means employers will pay as much as $21 in additional FUTA taxes per employee next year.
Connecticut Announcement Relating to 2022 Unemployment Tax Rates
The Connecticut Department of Labor has posted the 2022 unemployment tax rate information for employers. The 2022 taxable wage base will continue to be $15,000 in 2022. The new employer tax rate will remain at 3.0%. The minimum and maximum unemployment tax rates for experienced employers will continue to be 1.9% and 6.8%, respectively.
Delaware Announcement Relating to 2022 Unemployment Rates
The state of Delaware passed emergency rules to keep rates low for employers. Due to this rule all 2022 merit rates will be at the lesser of the 2020, 2021, or 2022 tax rates; except for delinquency rates (conditions apply). The rates range from 0.30% to 8.20%. The 2022 taxable wage base in Delaware will be $14,500, a decrease of $2,000 from the 2021 taxable wage base amount of $16,500.
District of Columbia ACT 24-159
The new act amends the Unemployment Compensation Act to waive the benefits paid to employees who became unemployed as a result of a public health emergency. Those benefits will not be charged to an employer’s experience rating.
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, 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 also requires 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.
Florida Announcement Relating to 2022 Unemployment Tax Rates
For 2022, the minimum rate is 0.10% and the maximum rate is 5.4%, except that employers participating in the short-time compensation program will be subject to a maximum rate of 6.4%. New employers pay 2.7% in 2022. The taxable wage base remains $7,000. The final adjustment factor and multiplier have decreased to 0.0010 and 0.186, respectively, in tax year 2022.
Georgia Announcement Relating to 2022 Unemployment Tax Rates
The base rate adjustment factor remained 50% and the Administrative Assessment remained at 0.06%. The rates range from 0.04% to 8.10%. The taxable wage base will continue to be $9,500 in 2022.
Hawaii HB 1278
The legislation, retroactively effective January 1, 2021, calls for unemployment tax rate schedule D (0.2% to 5.8%) to apply for 2021 and 2022. Further, the legislation requires the Director of Labor and Industrial Relations to omit benefits charged for experience ratings for employers due to COVID-19 in calendar years 2021 and 2022. Relief is provided to reimbursable employers for unemployment claims beginning March 15, 2020 through March 20, 2021 that are not a direct result of the COVID-19 pandemic. Reimbursable employers will receive a 50% credit against amounts owed for any base period the employer is making reimbursements rather than contributions.
Idaho HB H0450
The new bill freezes unemployment tax rates at 2021 levels for the 2022 and 2023 tax years.
Illinois Announcement Relating to 2022 Unemployment Tax Rates
For calendar year 2022, the adjusted state experience factor is 111% and the benefit conversion factor remains at 138.4%. Total rates range from 0.725% to 7.625% (0.675% to 6.875% in 2021), including the 0.525% fund building factor in effect for 2022. 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 3.525% for 2022. There are no NAICS-rated sectors in 2022 that will pay a higher “entry” rate.
Illinois SB 157
The bill appropriates $2.7 billion in ARPA funds for the repayment of the federal Title XII advances to the state's unemployment trust fund. The bill notes that the 0.325% additional surcharge added to the contribution rate will remain in effect in 2023. In addition, the legislation provides that the state experience factor will increase 16% in 2023. The 2022 rate is 111%.
Indiana HB 1111
The new 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%.
Indiana HB 6633
The new law provides that employers will not be charged for unemployment benefits paid from March 13, 2020 through June 30, 2021. However, the waived charges may be recovered through a mutualized unemployment tax in the subsequent year.
Indiana Announcement Relating to 2022 Unemployment Tax Rates
For 2022, the solvency surcharge rate is 0%. Applied rates for employers with an account credit reserve balance range from 0.50% to 3.80% and penalty rates for employers with an account credit reserve balance range from 2.50% to 5.80%. Applied rates for employers with an account debit reserve balance range from 4.90% to 7.40% and penalty rates for employers with an account debit reserve balance range from 6.90% to 9.40%. New employers pay a rate of 2.50% and new governmental employers pay a rate of 1.60% in 2022. Also, the new construction employer rate of 2.50% applies unless certain conditions are met. New employers are exempt from the solvency surcharge.
Iowa Announcement Relating to 2022 Unemployment Tax Rates
Unemployment insurance tax rates for Iowa employers will remain unchanged for 2022 and will range from 0.0% to 7.5% (Tax Table 7). For the fifth consecutive year, the tax rates used to fund unemployment benefits will be the second lowest allowed by law.
Iowa Announcement Relating to 2022 Wage Base
The taxable wage base increased from $32,400 for 2021 to $34,800 for 2022 due to an increase in the average annual wage for 2020 of $52,130.71 up from $48,455.86 in 2019.
Iowa Announcement Relating to 2023 Wage Base
The taxable wage base will increase from $34,800 for 2022 to $36,100 2023.
Kansas HB 2196
Under the new legislation, Kansas unemployment tax rates will be determined using a standard rate schedule with six new solvency rate schedules and six new credit rate schedules providing for solvency and credit rating adjustments to be made according to the experience rating of employers, effective with tax year 2022. Tax rates for the standard schedule range from 0.2% to 5.4% for positive-rated employers and from 5.6% to 7.6% for negative-rated employers. The solvency rate schedules increase the tax rates relative to the standard schedule, ranging from 0.23% to 6.82% for positive-rated employers and from 6.34% to 9.6% for negative-rated employers. Credit rate schedules lower the tax rates relative to the standard schedule ranging from 0.15% to 4.69% for positive-rated employers and from 4.13% to 6.6% for negative-rated employers. Kansas has sent an email communication directly to you with the details.
Kansas Announcement Relating to 2022 Unemployment Tax Rates
For 2022, eligible positive-balance employers pay rates ranging from 0.20% to 5.40%. Negative-balance employers pay rates ranging from 5.60% to 7.60% for 2022. New employers pay 2.70%, except new construction employers pay 6.0% for 2022
Kentucky Announcement Relating to 2022 Unemployment Tax Rates
The taxable wage base will increase from $10,800 to $11,100 for 2022. The rate schedule will increase from Schedule A to Schedule C (ranging from 0.50% to 9.50%)
Kentucky Announcement Relating to COVID Benefit Charges
The Kentucky Office of Unemployment Insurance has updated its self-service webpage to note that the reserve accounts of contributory employers will not be charged for unemployment benefits through the third quarter of 2021. Benefits paid in the first and second quarters of 2021 were also not charged against the accounts of contributory employers. Reimbursing employers are relieved of 50% of benefit charges for first quarter 2021, and 75% of benefit charges for the second and third quarters 2021
Kentucky HB 144
The bill freezes the unemployment tax rate schedule to Table A (rates range from 0.3% to 9%). Table A was in effect for the 2019 through 2021 tax years. Rates for 2022 were originally determined under Table C (rates range from 0.5% to 9.5%). The bill also freezes the taxable wage base at the 2020 level of $10,800. The taxable wage base for 2022 was originally $11,100. Additionally, the bill removes the surcharge assessment in 2022.
Louisiana SB 89
The new legislation provides for unemployment insurance “Procedure 2” to be applied by the secretary of the Louisiana Workforce Commission for calendar year 2022. Procedure 2, among other provisions, stipulates that the taxable wage base will be $7,700 for 2022.
Louisiana SB 5
The law suspends the provisions of R.S. 23:1536(E)(1) relative to the unemployment insurance solvency tax on employers.
Louisiana HB 380
The new legislation amends R.S. 23:1536(2), reducing employer’s tax contributions under certain circumstances: Circumstance 1: 10% discount granted to employers with positive reserve ratios if the trust fund balance is greater than $400 million dollars. Circumstance 2: Additional 10% discount granted to employers with a positive reserve ratio if the fund balance is greater than $1.4 billion dollars. Negative reserve employers will no longer receive a 10% rate reduction.
Louisiana Announcement Relating to 2022 Unemployment Tax Rates
The 2022 social charge rate increased from 16.72% to 17.68% which will result in higher rates for most employers. The rate range for all employers who qualify for an experience-based rate will be 0.09% to 6.20%. Negative reserve employers will no longer receive a 10% rate reduction. The rate range for new employers first established as liable in 2022 will be 1.16% to 2.89% and all other new employers’ liable years prior and including 2021 will be 1.16% to 6.20%. The taxable wage base will be $7,700 for 2022.
**NEW** Louisiana HB 192
The legislation freezes the state's unemployment taxable wage base at $7,700 in 2023. State law requires the unemployment wage base to increase based on the balance in the unemployment trust fund.
Maine Announcement Relating to 2022 Unemployment Tax Rates
The Maine Department of Labor has announced that unemployment tax rates will continue to be determined under Schedule B in 2022, the second 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% UPAF rate that are now in effect. As adjusted, rates for 2022 range from 0.53% to 6.16%. New employers pay a combined total rate of 2.45% in 2022. Unemployment taxes are assessed on the first $12,000 in wages on each employee during the calendar year. The infusion of $382 million in federal funding into the state's unemployment trust fund allowed the unemployment tax rate schedule to remain unchanged for 2022.
Maryland SB 811
The new legislation sets the unemployment tax rates for 2022 and 2023 to be determined under Table C, rather than Table F, as they are for tax year 2021. Tax rates under Table C range from 1.0% to 10.5%, whereas tax rates under Table F range from 2.2% to 13.5%. The bill addresses the shortfall in the unemployment trust fund by allocating qualified federal funds to the state unemployment trust fund to buttress the solvency level.
Maryland Announcement Relating to 2022 Unemployment Tax Rates
For calendar year 2022, rates are determined under Table C and range from 1.00% to 10.50%. New employers pay 2.30% for 2022, except that new construction employers headquartered in another state pay 5.40%.
Massachusetts SB 90
The new bill freezes a statute-mandated increase in the unemployment tax schedule through calendar year 2022. However, the bill also adds a surcharge to 2021 and 2022 rates to cover anticipated interest payments on federal advances issued to Massachusetts to cover unemployment obligation shortfalls. The legislation also excludes all COVID-19-related benefits paid between March 10, 2020 and August 1, 2021 from the UI solvency rate calculation.
Massachusetts Announcement Relating to 2022 Unemployment Tax Rates
The Solvency Assessment decreased from 1.12% to 0.59% but the COVID-19 Recovery Assessment increased from 10.5% to 12.5% which will have varying effects on the rates. The total rates range from 0.114% to 16.222%. The taxable wage base is $15,000 for 2022.
Michigan Announcement Relating to 2022 Unemployment Tax Rates
Unemployment rates for 2022 will remain unchanged from 2021. The range of rates for experienced employers will continue to run from 0.06% to 10.3%. The new employer rate for non-construction employers will remain 2.7%, while the rate for construction employers is expected to remain at 6.0%. The maximum rate for experienced employers will continue to include a 6.3% maximum chargeable benefit, a 3.0% maximum account building component, and a 1.0% maximum nonchargeable benefits component. The range for non-chargeable benefits components will continue to run from 0.06% to 1.0%. Finally, the annual taxable wage base will remain at $9,500 for 2022.
**NEW** Mississippi Announcement Relating to 2022 Unemployment Tax Rates
For 2022, the General Experience Rate remained at 0.00%, and the Workforce Investment and Training Contribution Rate remained at 0.20%. The state also passed legislation that indicates that employer's experience rates will not be affected by charges incurred during the period of March 8 through December 31, 2020. The total new employer rate 1.20% and total experience rates range from 0.20% to 5.60%. The taxable wage base for 2022 will remain $14,000.
Minnesota Announcement Relating to 2022 Unemployment Tax Rates and Wage Base
The base rate increased from 0.1% to 0.5%, and the Workforce Enhancement Fee of 0.1% remained the same. The rates range from 0.60% to 9.50% which includes the 0.1% Workforce Enhancement Fee. The state again included a Federal Loan Interest Assessment which decreased from 4.00% to 1.80%. The state also reinstituted the 14% Additional Assessment, resulting in increased costs for all employers. These additional assessments are not included in the Min and Max rates indicated above or on the tax rate notice as these apply to the “total amount due” not the taxable wages. The state has a specific formula for calculating the Initial amount due and the Final UI tax/assessments due which can be found in “Understanding your tax rate factors and assessments” on the state’s website. The taxable wage base increased from $35,000 to $38,000 for 2022.
Minnesota SB 2677
The new law reduces the amount of unemployment tax and assessments a taxpaying employer will owe in 2022 and 2023. The legislation changes the 2022/2023 base rate from 0.50% to 0.10%, the 2022/2023 additional assessment from 14.00% to 0.00%, and the 2022 special assessment (federal interest loan assessment) from 1.80% to 0.00%.
Since nearly all Minnesota employers already have submitted their wage detail reports for the first quarter of 2022, it means that the amount they owe already has been calculated and now will need to be recalculated using the new rates. The agency expects that it will take one to two weeks to complete the recalculation process.
After the recalculation is completed, employers that have already made their first quarter 2022 tax payments will have a credit on their account. The credit will automatically be carried forward and used to reduce the amount due for the second quarter of 2022. Alternatively, employers with a credit may be able to request a refund of the overpaid tax dollars. This may require a technical correction to the bill. It may take a couple months to complete the processing of refunds. In addition, the Commissioner must waive any interest or penalties accrued on first quarter 2022 contributions due on April 30, 2022, but not paid on or before May 31, 2022.
Lastly, by May 9, 2022, the Commissioner must determine the sum of any outstanding loans and interest from the federal unemployment insurance trust fund and issue payments to that trust fund equal to that sum. This will allow the state to avoid any federal credit reduction in 2022.
Mississippi SB 3051
An act to provide that the general experience rate for 2021 shall be 0%; to provide 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; to provide 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.
Missouri Announcement Relating to 2022 Unemployment Tax Rates
For 2022, the contribution rate of an experienced employer may range from 0.0% to 6.750%. For experience-rated employers that are participating in the workshare program, contribution rates may range from 0.0% to 9.450%. The rate payable by new employers in 2022 is 2.376%. New construction and mining employers also will pay 2.376% in 2022. Note, however, the new non-profit employer contribution rate is 1.00% and new employers in the workshare program will pay 9.0% in 2022. For 2022, a 12% decrease contribution rate adjustment is in effect for accounts that have a base rate lower than 6% and a 10% decrease adjustment is in effect for accounts that have a base rate of 6% or higher.
Montana Announcement Relating to 2022 Unemployment Tax Rates
For 2022, Schedule I remains in effect and there is also a 0.13% Administrative Fund Tax (AFT) for employers in Rate Class 1 and 2 and a 0.18% AFT for all other experience-rated employers. Total rates for positive-balance employers range from 0.13% to 1.60%. Total rates for negative-balance employers range from 3.10% to 6.30%. The taxable wage base for 2022 is $38,100, which is 80% of the 2020 average annual wage in Montana ($47,670) rounded to the nearest $100.
Nebraska Announcement Relating to 2022 Unemployment Tax Rates
Rates for experienced employers will range from 0% to 1.05% in 2022 for positive-rated employers (0% to 1.08% in 2021). The rate for negative-rate 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 be unchanged. The taxable wage base will remain at $9,000 ($24,000 for UI Tax Category 20 employers).
Nevada SB 461
The law earmarks up to $335 million of American Rescue Plan Act funds for the repayment of federal Title XII advances. The Nevada Department of Employment, Training and Rehabilitation (DETR) paid off the $332,437,148 in early September, right before the charging of interest on the loans.
Nevada Announcement Relating to Benefit Charges
Contributory employers will not be charged against their experience record for the second, third and fourth quarters of 2020, or the first and second quarters of 2021. Contributory Employers will not receive a charge statement for these quarters.
Nevada Announcement Relating to 2022 Unemployment Tax Rates
Rates range from 0.30% to 5.40%. Included in the rate is the 0.05% Claimant Employment Program (CEP) rate assessed to all employers except those that are maximum rated. Contributory Employers will not be charged against their experience record for the second, third or fourth quarter of 2020, or their first, second or third quarter of 2021. The taxable wage base is $36,600 for 2022.
New Hampshire (fiscal year jurisdiction) 2021/2022 Unemployment Tax Rate Issuance
New Hampshire 2021/2022 SUI tax rates were issued on August 26, 2021. The rate tables remained the same (rates range from 0.1% to 8.5%) however, the rate reduction is 0.00% and the Inverse Rate Surcharge of 1.5% was 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 and fourth quarters of 2021 and first quarter of 2022. The rate could change for the second quarter of 2022. The 2022 taxable wage base remains $14,000.
New Jersey (fiscal year jurisdiction) 2021/2022 Unemployment Tax Rate Issuance
New Jersey 2021/2022 SUI tax rates were issued on August 19, 2021. Table C is in effect (rates range from 0.5% to 5.8%) for fiscal year 2022 (from July 1, 2021 through June 30, 2022). The 2022 taxable wage base has been determined and has increased to $39,800.
New Jersey (fiscal year jurisdiction) Bill A-4853/S-301
The bill aims to assist employers affected by the 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.
New Mexico Announcement Relating to 2022 Unemployment Tax Rates and Wage Base
The unemployment tax rates for experienced employers in 2022 will range from 0.33% to 6.4% (0.33% to 5.4% in 2021). The unemployment tax rates for new employers vary by industry and range from 1.0% to 1.31% in 2022 (1.0% to 1.23% in 2021). The taxable wage base increases from $27,000 to $28,700 in 2022. The reserve factor, used in part to calculate an experienced employer's unemployment tax rate, will not be released until later.
New York Announcement Relating to 2022 Unemployment Tax Rates
For 2022, 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 2022 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%.
New York SB 6791A
Proposed legislation (L. 2022, S6791A), passed by the New York Senate, provides the employer contribution rates for the 2022 and 2023 fiscal years for the unemployment insurance (UI) program will not increase regardless of the current size of the fund index. The bill was proposed because, statutorily, employer rates would increase without legislative intervention due to the increase in unemployment from the COVID-19 pandemic. The bill would effectively delay two years of rate increases. For the 2022 fiscal year, the contribution rate would be determined by the size of the index column headed at 2.5% but less than 3%. For the 2023 fiscal year, the statutory employer contribution rate would be determined by the size of the index column headed at 2% but less than 2.5%. If the actual size of the index fund column results in a lower overall rate, the provisions would not apply. The rates would be impacted by the employer's negative or positive account percentage. The bill is currently being reviewed by the Assembly.
New York Announcement Relating 2022 Interest Assessment Surcharge
State law requires contributing employers to pay an annual Interest Assessment Surcharge, or IAS, on outstanding Title XII advances. Beginning in July 2022, employers who make unemployment insurance contributions will be notified of the 2022 IAS rate (.23%) along with information about how to pay this annual charge (estimated to be about $27.60 per employee). Unless the Federal government chooses to abate all or part of the interest incurred or the principal balance amount is repaid with no more interest accrued, businesses will be required to make annual IAS payments until all interest has been fully paid.
North Carolina Executive Order 231
Executive Order (EO) 231 reinstates certain requirements for unemployment claimants previously imposed by EO 118. EO 231 rescinds section 3(b), among other sections, which directed the Department of Commerce to not charge COVID-19 related unemployment benefits to employers' accounts.
North Carolina SB 311
The bill requires the base unemployment contribution rate for an experience-rated employer to remain at 1.9% for the 2022 calendar year. Employers receive credit for tax payments posted to their account. These credits are used to determine the base rate from which the unemployment tax rates for all contributory North Carolina employers are assigned on an annual basis. The base rate in effect for a given year is determined by the solvency of the trust fund. According to a bill summary, the base rate would have been 2.4% for the 2022 calendar year if the legislation did not require it to remain at 1.9% because the balance in the state's unemployment trust fund missed the trigger by $170 million.
North Carolina Announcement Regarding 2022 Unemployment Tax Rates
The North Carolina Division of Employment Security has announced its unemployment tax rates for 2022. Unemployment tax rates for experienced employers continue to range from 0.06% to 5.76% in 2022. The new employer rate remains at 1.0%. The final date to protest an unemployment tax rate is May 1, 2022. The taxable wage base increases from $26,000 to $28,000 in 2022.
North Dakota Announcement Regarding 2022 Tax Rates and Wage Base
North Dakota’s 2022 contribution rates will continue to range from 0.08% to 1.13% for positive-balance employers and from 6.09% to 9.69% for negative-balance employers. The new employer rate for positive-balance non-construction employers will be 1.02% and the new employer rate for negative-balance non-construction employers will be 6.09%. The new employer rate for both positive-balance and negative-balance construction employers will be 9.69%. The 2022 taxable wage base will be $38,400.
Ohio HB 168
The legislation appropriates ARPA funds to be used to repay federal Title XII loans. The bill: (1) requires, on August 31, 2021, or as soon as possible thereafter, and again on December 27, 2021, or as soon as possible thereafter, the Director of Job and Family Services (JFS Director) to certify the balance of amounts loaned to Ohio by the federal government for the purpose of paying unemployment benefits; (2) requires the Director of the Office of Budget and Management to remit the amounts certified, but not to exceed the available balance, from the State Fiscal Recovery Fund to the Unemployment Compensation Fund to the credit of the Mutualized Account; (3) specifies that the amounts remitted are appropriated; and (4) requires the JFS Director to deposit the amounts remitted as cash with the U.S. Secretary of Treasury to reduce or eliminate the balance of amounts advanced to Ohio. The state borrowed $1,471,765,771 that had to be repaid by September 6, 2021 to avoid the payment of interest.
Ohio Announcement Relating to 2022 Unemployment Tax Rates
The Ohio Department of Jobs and Family Services (DJFS) has announced that unemployment tax rates for experienced employers will range from 0.3% to 9.7% in 2022 (0.3% to 9.3% in 2021). Because the Ohio Unemployment Trust Fund is below the "minimum safe level" (MSL) as of the computation date of the 2022 rates, the 2022 tax rate schedule will include a minimum safe level increase to protect the integrity of the trust fund. The additional rate will be credited equally to the mutualized account and the employer's account. The total experience rates range from 0.3% to 7.0% for positive experience-rated employers and 7.2% to 9.7% for negative experience-rated employers. The Contribution Rate Determination will show the combined total of the employer's individual experience rate and the minimum safe level increase. Additionally, there will be a 0.5% mutualized rate in effect for 2022 due to a negative balance in the mutual account. The mutualized tax is used solely for the payment of benefits. Total rates will range from 0.8% to a maximum assigned rate of 12.8%. The new employer rate will remain at 2.7%, except new construction employers will pay 5.5% (5.8% in 2021). Delinquent employers will pay 12.8% (12.3% in 2021). The taxable wage base will remain $9,000. The 2022 Contribution Rate Determinations will be mailed to employers on or before December 1. The state of Ohio allows voluntary contributions which must be submitted by December 31, 2021.
Oklahoma 2022 Rate Release
The state experience factor, conditional factor and technology fund assessment will remain the same in 2022 as it was in 2021. The 2022 wage base will be $24,800. The 2022 contribution rate notices will be mailed to the employer’s addresses of record by September 30.
Oregon HB 3389
The new 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;
Allows employers to defer payment until June 30, 2022, of up to one-third of tax owed in 2021 if their tax rate increased by at least 0.5% percentage point between 2020 and 2021 without incurring interest or penalties;
Forgives a percentage of deferred 2021 taxes depending on the amount an employer’s tax rate increased in 2021 and if the employer is in good standing;
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.
Note: Participation in the deferral portion of this relief plan could negatively impact employers’ FUTA tax credit. Some employers may be unable to utilize the full credit for state unemployment tax paid on their Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) if they pay state unemployment taxes after the Form 940 due date.
Oregon Announcement Relating to 2022 Unemployment Tax Rates
The Oregon Employment Department (OED) has announced that unemployment tax rates will be reduced in 2022. Experienced employer rates will be determined under Tax Schedule III (Schedule IV in 2021). Rates range from 0.9% to 5.4% (1.2% to 5.4% in 2021). New employers will pay 2.4% (2.6% in 2021). The taxable wage base will be $47,700 ($43,800 in 2021). The special payroll tax offset is 0.09% for all four quarters of 2022.
Pennsylvania Announcement Relating to 2022 Unemployment Tax Rates
Unemployment tax rates for experienced employers will continue to range from 1.2905% to 9.9333% in the 2022 tax year. These rates include a 5.40% surcharge and 0.50% additional contribution tax. The interest factor will not be in effect for 2022 (1.10% in 2021). Delinquent employers pay a basic rate that is 3.0% higher. The taxable wage base will continue to be $10,000 in 2022. Employees must also make unemployment tax contributions. The employee unemployment tax withholding rate will remain at 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.
The 5.40% surcharge is factored into the contribution rate and appears as the Surcharge Adjustment on the rate notice (Basic Contribution Rate + 3% Increase for UC delinquency, if applicable, x 5.4 percent = Surcharge Adjustment). This applies to all employers and is not subject to appeal.
The 0.50% Additional Contributions tax applies to all employers, except newly liable employers (unless the employer is also subject to an increase for delinquency) and is not subject to appeal. This is added to the tax contribution rate after the Surcharge Adjustment is calculated.
The Total Contribution Rate is the sum of the Basic Contribution Rate, the Increase for delinquency (if applicable), the Surcharge Adjustment and the Additional Contributions.
Rhode Island Executive Order 21-92
Executive Order (EO) No. 21-92 provides that charges to employer accounts since January 27, 2020 for COVID-19 related claims are suspended. Such charges will be directed to the state's balancing account. The order supersedes Executive Order 20-19 and will remain in effect through October 1, 2021 unless renewed, modified, or terminated by a subsequent EO.
Rhode Island Executive Order 21-102
Rhode Island Governor Daniel J. McKee issued Executive Order No. 21-102 which replaces the date provided in R.I. Gen. Laws § 28-43-1(2) for the definition of "computation date" from September 30 of each year to November 30, 2021 for the purposes of determining the experience rate for eligible employers for calendar year 2022. This adjustment was made in order to allow the state’s unemployment trust fund more time to recover before determining the rate schedule, which could lead to a lower rate schedule for 2022. Due to this delay in the computation date, it may lead to a delay in the issuance of the state’s 2022 tax rate notices.
Rhode Island Announcement Relating to 2022 Unemployment Tax Rates
Effective January 1, 2022, the UI tax rate schedule will be Schedule H, with tax rates ranging from 1.2% to 9.8%. The rate for new employers will be 1.19%, including the 0.21% Job Development Assessment. The UI taxable wage base for 2022 will be $24,600 for most employers and $26,100 for employers at the highest rate. By law, the UI taxable wage base represents 46.5% of the average annual wage in the state.
South Carolina Announcement Relating to 2022 Unemployment Tax Rates
The South Carolina Department of Employment and Workforce (DEW) has announced that the 2022 unemployment tax rates for businesses will decrease or will remain unchanged from 2020 levels due to legislative action in response to the COVID-19 public health emergency. An Annual Tax Rate Notice detailing individual rates will be mailed to each employer on November 12, 2021. There will be no solvency surcharge imposed in 2022. Unemployment tax rates for experienced employers will continue to range from 0.06% to 5.46% in 2022; however, businesses may still move between classes based on unemployment claim activity that was prior to the pandemic and/or not COVID-19 related. The new employer rate is the rate in tax class 12 for a given year. The new employer rate remains 0.55% in 2022. The rates above include a 0.06% contingency assessment. The taxable wage base will remain at $14,000 in 2022.
South Dakota Announcement Relating to 2022 Unemployment Tax Rates
South Dakota’s 2022 SUI tax rates were issued on October 29, 2021. Schedule B remained in effect (ranging from 0.00% to 9.30%). Included in the rate is the Investment Fee rate, ranging from 0.1% to 0.53% and an Administrative Fee Rate of 0.02%. Both are assessed to all but minimum (0.0%) rated employers. The contributions for these rates are calculated as separate items on the quarterly contribution report. The 2022 taxable wage base will remain at $15,000.
Tennessee (fiscal year jurisdiction) Announcement Relating to Second Half of 2021 Tax Rates and First Half of 2022 Tax Rates
The Tennessee Department of Labor and Workforce Development (DLWD) has announced that unemployment tax rates for experienced employers will continue to be determined under Table 6 for the second half of 2021 (July 1, 2021 to December 31, 2021). Under this rate table, rates range from 0.01% to 2.3% for positive-balance employers and from 5.0% to 10.0% for negative-balance employers. The taxable wage base for unemployment remains $7,000. Effective January 1, 2022, until June 30, 2022, Premium Rate Table 6 remains in effect.
Texas SB 8
The legislation makes appropriations that include approximately $7.2 billion, sourced from funds received from the Coronavirus State Fiscal Recovery Fund established under the American Rescue Plan Act (ARPA), to be used to retire Title XII Advances and replenish the unemployment insurance Trust Fund to the statutory floor. The deposit will improve the solvency of the Texas UI trust fund and reduce interest charges on the outstanding balance that would otherwise accrue and be payable by Texas.
Utah HB 2002
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.
Utah Announcement Relating to 2022 Unemployment Tax Rates
The Utah Department of Workforce Services (DWS) has announced that for 2022, unemployment tax rates for experienced employers will range from 0.3% to 7.3% in 2022 (0.2% to 7.2% in 2021). New employer rates vary by industry, except new, out-of-state contractors are assigned the 7.3% maximum tax rate (7.2% in 2021). The above rates have increased due to an increase in the social cost rate from 0.2% to 0.3% in 2022. For 2022, the reserve factor is 1.15, meaning the reserve fund is less than an adequate level. The taxable wage base will increase from $38,900 to $41,600 in 2022.
Vermont (fiscal year jurisdiction) Announcement Relating to 2021/2022 Unemployment Tax Rates
Vermont 2021/2022 SUI tax rates were issued on June 24, 2021. The rate schedule increased from Schedule I to Schedule III. The state did not include calendar year 2020 taxable payroll and benefits charged in the rate computation. The 2022 taxable wage base will not be determined until later this year.
Vermont (fiscal year jurisdiction) Announcement Relating to 2022/2023 Unemployment Tax Rates and Wage Base
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 for 2023 will decrease from $15,500 (in 2022) to $13,500.
Virginia HB 7001
The new bill determines how ARPA funds will be used, includes a provision that requires the Virginia Employment Commission, when calculating the SUI tax rates for 2022, to exclude pandemic related claims from April 1, 2020 through June 30, 2021. Further, the law orders that an employer's SUI tax rate may not exceed its 2021 tax rate. The bill also requires the “pool charge” for 2022 to be computed using the same methodology and may not exceed the 2021 rate. Finally, the bill appropriates $862,000,000 to the Unemployment Trust Fund and $73,600,000 towards information technology modernization and improvements.
Virginia Announcement Relating to 2022 Unemployment Tax Rates
The Virginia Employment Commission (VEC) has announced that unemployment tax rates for experienced employers will continue to range from 0.33% to 6.43% in 2022. The new employer rate will remain 2.73%. New out-of-state contractors doing business in Virginia, delinquent employers, and non-rated experienced employers will continue to pay 6.43%. A 0.03% pool cost charge will be in effect in 2022 as well as a fund building charge of 0.20%. The taxable wage base will remain at $8,000 in 2022.
Virgin Islands Announcement Relating to 2022 Unemployment Tax Rates
The U.S. Virgin Islands Department of Labor (VIDOL) has announced that the unemployment taxable wage base decreases from $32,500 to $30,800 in 2022. The new employer tax rate continues to be 2.0% and the experienced employer tax rate remains at 2.5% in 2022.
Washington State SB 5061
The legislation has a number of provisions designed to provide unemployment tax relief to employers. The new 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 SB 5478
New Legislation creates the Unemployment Insurance (UI) Relief Account. The UI Relief Account may only be used for reimbursing the unemployment compensation fund for forgiven benefits. The Washington Employment Security Department (ESD) is required to determine the forgiven benefits for approved employers to be reimbursed by the UI Relief account rather than charged against an employer's experience rating account. ESD must transfer from the UI Relief account to the unemployment compensation fund an amount equal to the forgiven benefits. The legislation identifies employers for four categories.
Category 1 employers are contributing employers who had 20 or fewer employees as of the 4th quarter of 2020 whose experience rating increased by three or more rate classes from 2021 to 2022, and belong to specified North American Industry Classification System (NAICS) codes.
Category 2 employers are contributing employers of any size whose experience rating increased by three or more rate classes from 2021 to 2022, and belong to specified North American Industry Classification System (NAICS) codes.
Category 3 employers are contributing employers who had 20 or fewer employees as of the 4th quarter of 2020, had an experience rating that has increased by four or more rate classes from rate year 2021 to rate year 2022; and do not meet the definitions of categories 1 or 2.
Category 4 employers are contributing employers who had more than 20 employees, but fewer than 5,000 as of the 4th quarter of 2020, had an experience rating that has increased by four or more rate classes from rate year 2021 to rate year 2022; and do not meet the definitions of categories 1, 2, or 3.
For Category 1 and 2 employers, approved benefits are benefits paid to employees during the fiscal year ending June 30, 2021, not to exceed an amount that would reduce the employer's rate class increase to no more than a two-rate class increase.
For Category 3 and 4 employers, approved benefits are the benefits paid to employees during the fiscal year ending June 30, 2021, not to exceed an amount that would reduce the employer's rate class increase to no more than a three-rate class increase. By September 1 of each year, the ESD will identify delinquent employers who have not entered into an ESD-approved deferred payment contract. The ESD must notify employers of the availability of deferred payment contracts and provide assistance in entering such contracts. Relief expires July 30, 2022.
**NEW** Washington State Announcement Relating to 2023 Wage Base
The Washington Employment Security Department has announced that the taxable wage base for unemployment tax purposes will increase from $62,500 to 67,600 in 2023.
Washington State Announcement Relating to 2022 Wage Base
The Washington Employment Security Department has announced that the taxable wage base for unemployment tax purposes will increase from $56,500 to $62,500 in 2022 due to a 10.1% increase in the average annual wage in 2020.
Washington Announcement Relating to 2022 Unemployment Tax Rates
For 2022, contribution rates (including the graduated social cost rate) range from 0.30% to 6.00%. There is also an Employment Administration Fund tax in effect for 2022, which makes the total rate range 0.33% to 6.02%. Note that delinquent employer rates range from 1.43% to 8.33%
Washington State SB 5873
The bill reduces the social tax for nearly all employers in 2022 and 2023 (those in the highest rate classes likely won’t see a reduction) and reduces the social tax for many employers with 10 or fewer employees for 2023. In general, employers may pay a social tax in addition to experience-rated tax. The bill reduces the maximum social tax from 0.75% to 0.50% in 2022, and from 0.80% to 0.70% in 2023. Further, in 2023, employers with 10 or fewer employees, as of the fourth quarter of 2021, will have a graduated social tax factor capped at rate 7. This would lower the tax rate for small businesses who are in rate class 8 or higher.
Employers should expect to receive revised 2022 tax rate notices.
West Virginia Announcement relating to 2022 Unemployment Tax Rates
Unemployment tax rates for experienced employers continue to range from 1.5% to 8.5% in 2022 (Column C of Table III). 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%. At this time, the wage base is scheduled to remain at $12,000 for 2022. However, there is the possibility that legislative action may reduce the wage base to $9,000.
Wisconsin AB 406
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 taxable wage base will remain at $14,000 in 2022.
Wyoming Executive Order 2021-08
Wyoming Governor signed Executive Order 2021-08 that relieves employers of unemployment insurance charges related to claims filed between March 13 and December 31, 2020 due to the COVID-19 pandemic. Also, tax credits will be provided to employers who experienced an increase in unemployment tax already paid in 2021. $58 million in federal funds will be used to replenish the state's unemployment Trust Fund to help avoid future increases due to the tax relief. Unemployment tax rates will decrease after October 31, 2021 and employers will be notified by the Wyoming Department of Workforce Services of credits that can be applied to future unemployment taxes.
Wyoming Announcement Relating to 2022 Unemployment Tax Rates
The total of all three constant factors used in the rate computation decreased from 1.28% to 0.00% for most employers and 0.35% for employers with zero benefit charges, resulting in lower rates. Rates range from 0.00% to 8.50%. The taxable wage base is $27,700 for 2022.
The COVID-19 pandemic has been severe and unprecedented. States are continuing to take actions to mitigate some of the financial hardship expected on employers in 2022 and beyond.
How states decide to address COVID-19 related benefits, rating calculations, surcharges, and taxable wage base limits, can have a direct impact on SUI tax costs. With SUI tax costs anticipated to increase in the near-term, it is more important than ever for employers to take actions to help mitigate future increases, including:
Diligent adjudication of unemployment claims
Auditing of benefit charges and timely appealing those that appear improper
Reconciling SUI tax rates used to pay tax contributions with the most recently issued tax rate notices to ensure proper payment
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 COVID-19 Resources site which will be updated as new information becomes available. The Equifax COVID-19 Resources site includes a 2022 Tax Guide intended to assist employers in identifying potential risks associated with increases in SUI tax costs from 2021 to 2022 (e.g., changes in minimum and maximum SUI tax rates, changes in wage bases, etc.).
Please reach out to your Equifax unemployment representative to help address potential SUI tax rate impacts resulting from COVID-19. Not a current client? Please feel free to contact our Employment Tax Consulting Group with any questions.
Disclaimer: The information provided herein is subject to change. It is intended as general guidance and not intended to convey specific tax or legal advice. Equifax is not providing, and cannot provide, tax and legal advice. Before taking any actions, employers should consult with internal and/or external counsel.
Per 2022 SUI Trust Fund Solvency Report issued by the U.S. Department of Labor, Office of Unemployment Insurance, Division of Fiscal and Actuarial Services (April 2022).
Per 2021 SUI Tax Measures Report issued by the U.S. Department of Labor, Office of Unemployment Insurance, Division of Fiscal and Actuarial Services (March 2022).
Per data obtained from the TreasuryDirect site (a service offered by the U.S. Department of the Treasury Bureau of the Fiscal Service).
Per respective Unemployment Insurance Data Summary reports published by the U.S. Department of Labor.
Per IRC Section 3302 and related U.S. Treasury Regulations.
Per Comparison of State Unemployment Insurance Laws issued by the U.S. Department of Labor, Employment and Training Administration.
Recessionary period according to the Federal Reserve.
Total Unemployment Rate for December of each respective year per U.S. Department of Labor, Bureau of Labor Statistics. Net Trust Fund Balances per respective Unemployment Insurance Data Summary reports published by the U.S. Department of Labor.
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.
Per the U.S. Department of the Treasury site titled: Coronavirus State and Local Fiscal Recovery Funds.
Per the National Conference of State Legislature site titled: ARPA State Fiscal Recovery Fund Allocations.