By Tom Towson, CPA
Last updated: September 14, 2023
As state workforce agencies emerge from the financial stress
caused by the COVID-19 pandemic, it is prudent for employers to
monitor how this stress may impact their state unemployment
insurance (SUI) tax rates. This regularly updated resource is
intended to help provide employers insights into the condition of
the SUI financing system and the potential impact to rates in 2024
Before addressing the condition of the SUI financing system,
2023 tax rates under the Federal Unemployment Tax Act (FUTA) 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 had outstanding Title XII advances on January 1 for
at least two consecutive years (2021 and 2022) and on November 10,
2022. As such, these jurisdictions were subject to a FUTA credit
reduction for 2022. The net FUTA tax rate for 2022 increased
by 50%, from 0.60% to 0.90% (the U.S. Virgin Islands had its FUTA
tax credit reduced by 3.6% for an effective FUTA tax rate of 4.2%).¹
The following identifies the possible outlook for
2023 FUTA tax rates and the potential impacts of FUTA
Connecticut and Illinois:
Connecticut and Illinois repaid all outstanding
Title XII advances. Because of this action, the states
should not be subject to a FUTA credit reduction for
calendar year 2023, as long as the states do not borrow
again and have outstanding advances as of November 10,
California and New York:
If California 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.
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 and is expected to be waived for 2023.¹
Advances to State
Unemployment Funds² (Title XII of the Social
The Average High Cost Multiple (AHCM) is a standard measure
of the solvency of the SUI financing system using a primary
factor, a state’s trust fund balance at a point in time. State
trust funds are used to pay unemployment benefits. An AHCM
multiple of 1.00 indicates a state trust fund is deemed
sufficiently solvent and able to pay one year of benefits
associated with an average recessionary period. As of January 1,
2023, 37 states were not considered adequately funded under this measure.³
Average High Cost Multiple
(AHCM) (as of January 1, 2023)
A logical starting point for addressing the outlook for 2024
SUI tax rates is state unemployment trust fund balances, a primary
factor in developing SUI tax rates.
As depicted in the following graph, net trust fund balances
(trust fund balance net of federal Title XII advances) were negative
$39.46 billion at the end of Q1 2011, as a result of the Great
Recession, compared to negative $27.12 billion at the end of Q1
2021, as a result of the COVID-19 pandemic (i.e., $12.34 billion
more solvent). By the end of Q1 2022, trust fund balances rebounded
and were a net positive for the first time since the COVID-19
pandemic. With the infusion of Q1 2023 tax contributions (due April
30, 2023), net trust fund balances increased significantly by the
end of Q2 2023, a positive $39.99 billion.³ There is still a long
way to go before trust funds are at levels experienced just prior to
the COVID-19 pandemic.
Historical Net Trust Fund Balances
Net trust fund balances were substantially higher pre-COVID
than they were pre-Great Recession. Because of this and other
factors, 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 June 30, 2023.³
Net Trust Fund Balances by
State (descending order by state)
As state trust funds are depleted during a period of high or
increased levels of unemployment, SUI tax rates have historically
increased as well. However, the correlation is not immediate. There is
typically a lag between when an economic downturn impacts SUI tax
rates. This is because rating calculations typically take into
consideration more than just a single year of experience and look back
to historical experience in the development of rates. And since rates
are issued annually, a full year can pass before rates are next adjusted.
As illustrated in the below graph, as net trust fund
balances began to decline in 2009 as a result of the Great
Recession, the average SUI tax rate in the U.S. did not hit its
peak until 2012. After that peak, average rates declined for eight
consecutive years through 2020. In addition:
From 2020 to 2021, the average SUI tax rate
increased from 1.72% to 1.89% (a 9.9% increase).
From 2021 to 2022, the average SUI tax rate
decreased from 1.89% to 1.74% (a 7.9% decrease).
From 2022 to 2023, the average SUI tax rate is
expected to be relatively flat based on Equifax preliminary
Correlation of Historical
Average SUI Tax Rates to Net Trust Fund Balances⁴
The depletion of state trust funds can have negative
implications not only to future SUI tax rates but also the amount of
wages subject to those tax rates. Employers pay SUI tax on wages
earned and paid to each employee within a calendar year up to a
specified amount, known as the annual taxable wage base. Some states
correlate annual taxable wage base adjustments to state trust fund balances.
Over the past 15 years (2009 to 2023), taxable
wage bases have increased by an average of 2.8%
During the height of the Great
Recession (from 2008 to 2010), the two year average annual
increase was 4.8%.
From 2020 to 2021,
taxable wage bases increased by an average of 2.9%.
From 2021 to 2022, taxable wage bases increased
by an average of 3.9%.
From 2022 to
2023, taxable wage bases increased by an average of
The following table provides historical taxable wage base trends.⁵
Annual SUI Taxable Wage Bases
The following contains examples of actions taken by states
that could impact SUI tax rates in 2024 and beyond. These state
summaries are for informational purposes only. Please see the state
legislation and related materials for specific guidance.
The legislation makes numerous changes to the state's
unemployment insurance law as summarized below:
New employer rate. Effective January 1, 2024,
the new employer SUI tax rate is reduced from 2.9% to
Stabilization rate. Beginning in
fiscal year 2024, the SUI tax stabilization rate is
reduced from 0.2% to 0.125%.
rate. Effective January 1, 2024, the penalty rate for
failure to make timely SUI tax payments is reduced from 14%
Taxable wage base. Effective
January 1, 2024, the SUI taxable wage base will be
$7,000 if the unemployment trust fund balance is more
than $600 million as of June 30 of the most recently
completed state fiscal year.
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.
The legislation incrementally increases Colorado's
unemployment taxable wage base to $30,600 by calendar year 2026. The
wage base increased to $20,400 in 2023 (from $17,000 in 2022),
$23,800 in 2024, $27,200 in 2025, and $30,600 in 2026. Each year
thereafter, the wage base will be adjusted by the change in average
The law amends Colorado's unemployment law to extend the
hold on an employer's solvency surcharge through calendar year
2023. The solvency surcharge may be reinstated in 2024.
The legislation states that in order to comply with federal
unemployment law, the state is reducing employer premium rates by 10%
across all rates in the standard premium rate schedule, which is
offset by a corresponding increase to a new support surcharge rate.
Also, the bill expands the authorized use of money in the Title XII of
the Social Security Act Repayment Fund to allow the state's
Unemployment Insurance Division in the Department of Labor and
Employment (CDLE) to use the money for costs associated with bonds or
notes issued by the division, including interest on the bonds or
notes. Finally, the bill eliminates the requirement for employers to
submit premium reports to the UI Division and instead requires
employers to submit wage reports.
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.
The legislation addresses the state's calendar year 2024
unemployment tax rates and continues the temporary relief provided in
calendar year 2023 to employers who pay unemployment tax assessments
through 2024. It also will continue to reduce new employer tax rates,
and keep overall employer tax rates consistent with calendar year
2023, providing that the average employer assessment rate, the average
industry assessment rate, and the average construction industry
assessment rate will all be 1%. It reduces the maximum earned rate and
continues the use of the temporary simplification of the tax rate
schedules that are used to calculate unemployment assessments paid by
employers. It additionally provides for federal pandemic funds to be
used to replenish the Unemployment Trust Fund, allowing the Delaware
Department of Labor to implement unemployment tax relief for an
additional one-year period. It is estimated that these unemployment
tax assessment changes will reduce the tax obligation of employers by
an estimated $50 million. Finally, the new law restructures the
supplemental assessment that is currently being collected from all
employers, keeping the rate of 0.2%, but depositing it in the Special
Administration Fund instead of the UI Trust Fund. Uses of the Special
Administration Fund are expanded to include future technology needs of
The legislation changes how Florida’s UI tax rate is
computed for rates effective 2022 through 2025.
Tax rates effective January 1, 2023 through December 31,
2025, will exclude charges from the second, third and fourth
quarters of 2020 and all benefit charges paid as a direct result
of a government order to close or reduce capacity of a business
due to COVID-19, as determined by the Department of Economic
Opportunity. The tax rate calculation will also exclude the
application of the positive adjustment factor (trust fund
trigger). Lastly, benefit charges from the first and second
quarters of 2021 may be decreased if the Office of Economic and
Demographic Research (EDR) estimates total tax collection for rate
year 2022 will exceed $475.5 million. These changes to the tax rate
calculation are repealed if the trust fund reaches $4,071,519,600 on
June 1. On June 1, 2023, the trust fund was $2,953,834,695, per TreasuryDirect.
The new legislation required the state to make three
deposits during 2021 to the UI trust fund. The funding comes from
online sales tax collected from out-of-state e-commerce companies.
In addition, beginning July 2022, and on or before the 25th day of
each of the following months, the Florida Department of Revenue will
distribute $90 million monthly to the state's UI trust fund. The
Department is required to end monthly distributions when the
Department of Revenue receives certification from EDR that the
ending balance of the UI trust fund exceeds $4,071,519,600 or on
December 31, 2025, whichever is earlier.
The bill reinstates the 0.06% administrative assessment
which will be in effect for all experience rated employers. This
assessment applies to the time frame of January 1, 2024 through
December 31, 2026. It is set to expire as of January 1, 2027. The
administrative assessment does not apply to reimbursing employers
and those assigned a minimum or maximum rate. The new employer rate
has been reduced to 2.64% to account for the assessment, resulting
in a total rate of 2.70% for experience based employers. The total
new employer rate for non-profit employers will be 2.64%.
Hawaii’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.
The bill establishes the Unemployment Insurance Technology
Special Fund and requires an assessment. All employers are subject
to a 0.01% assessment for the special fund that will be used to
operate and maintain the unemployment information technology
infrastructure used for the payment of benefits and contributions.
The law creates a new tax rate Schedule C (former Schedule
E) which is to remain in effect through 2025. The rates range from
0.50% to 7.40%.
Iowa’s unemployment insurance tax rates for 2024 will remain
unchanged from 2023. Rates will continue to be determined under Rate
Table 8 in 2024 and will range from 0.0% to 7.0%. New non-construction
employers will pay 1.0% and new construction employers will pay 7.0%
in 2024. The taxable wage base in Iowa for 2024 will be $38,200, up
$2,100 from the taxable wage of $36,100 in 2023.
The Michigan Unemployment Insurance Agency (UIA) has
announced that there will be no change to the 2024 unemployment
taxable wage base. The current $9,500 wage base will remain
unchanged. The taxable wage base is reduced if the balance in the
Michigan Unemployment Compensation Fund equals or exceeds $2.5
billion and the UIA projects the balance will remain at or above
that level for the remainder of the calendar quarter and for the
entire succeeding quarter. As of June 30, the trust fund balance
was $2.2 billion. If the trust fund threshold met those
parameters, then the taxable wage base would have been reduced to
$9,000. Since it’s below $2.5 billion, employers will not see a
reduction in the taxable wage base for 2024.
The new legislation provides employers more time to file
unemployment tax rate and claim appeals. Currently, employers have 20
days to file an appeal. Effective May 5, 2024, employers will have up
to 45 days to file an appeal.
Nebraska has amended
its Employment Security Law as follows:
Voluntary contributions. Voluntary contributions
now may be submitted up to and including February 28 of a
particular year. They were previously due no later than
Determinations of liability or
combined tax rate. A notice of a determination of liability
or combined tax rate now will be promptly given to the
employer by either electronic notice or by mailing a notice
to the employer's last-known address or the address of a
representative designated in writing by the employer. The
address of record of an employer will continue to be the
address of record unless it is changed by the employer. An
employer that becomes subject to the Employment Security Law on or
after the effective date of L.B. 191 (May 26, 2023) will designate
its preferred method of contact and designated representative, if
any, at the time of its initial registration. An employer may
change its election at any time.
Beginning in 2024, employers will pay remuneration on the
first $40,600 paid to each employee, up from $40,100 in 2023.
New Hampshire Employment Security (NHES) has released an
updated set of unemployment insurance tax rates to its website for
the third quarter of 2023. The net rate will remain the same at a
range of 0.1% to 1.7% for positive-rated employers, and from 3.3% to
7.5% for negative-rated employers. The new employer tax rate remains 1.7%.
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,
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
(rates range from 1.2% to 7.0%) for fiscal year 2024
(from July 1, 2023 through June 30, 2024), unless
calculations call for a lesser table to be in
For the period of July 1, 2023, to June 30, 2024, rates are
determined under Schedule E and range from 1.2% to 4.3% for
positive-balance employers, with a special assigned rate of 5.4%, and
from 6.1% to 7.0% for negative-balance employers, with a special
assigned rate of 7.0%. New employers pay 3.4% during this period.
Note that these are basic rates and do not reflect any subsidiary
taxes or reductions. The taxable wage base for New Jersey is
increasing from $41,100 to $42,300 for the 2024 calendar year.
New York has announced that future unemployment taxable wage
bases are to increase as follows: (1) $12,500 in 2024; (2) $12,800
in 2025; and (3) $13,000 in 2026. After 2026, the wage base is
permanently adjusted on January 1 of each year to 16% of the state
average annual wage, rounded up to the nearest $100. The state
average annual wage is established no later than May 31 of each
year. The average annual wage cannot be reduced from the prior-year level.
In July of 2023, businesses across the state received
Interest Assessment Surcharge (IAS) bills. IAS bill payments go
toward paying down the interest on the state’s federal Title XII
advances used to pay benefits to unemployed workers during the
pandemic. The New York State Department of Labor is required by law
to collect this payment annually from employers who make
unemployment insurance contributions until the state’s debt is paid.
The IAS rate is based on the amount of federal interest due
on September 30, 2023. The current rate is .18%, a reduction from
last year’s rate of .23%. The IAS for employers is calculated using
the wages subject to contributions for the current payroll year (the
fourth quarter of 2021 through the third quarter of 2022) and
multiplying those wages by the IAS rate of .18%.
The bill increases unemployment insurance penalties.
Employers that fail to file contribution and wage reports on time
will be subject to a $200 penalty, up from $100. The penalty for
nonprofits will rise to $20 per day, up to a maximum of $200. The
bill also renews the state unemployment insurance program’s
technology reinvestment tax through 2027.
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;
adequacy percentages used to determine tax rate schedules;
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.
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.
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.
Effective July 1, 2023 through December 31, 2023, 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. For the period beginning July 1, 2023
through June 30, 2024, the new employer rate in Tennessee for
contributory employers remains at 2.7%. The taxable wage base for
unemployment remains $7,000.
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.
The Vermont 2024 Unemployment Rate Notices were released on
June 27, 2023. The rate schedule remained Schedule I, and the ratios
changed, rates range from 0.40% to 5.40%. Benefits charged and taxable
payroll for calendar year 2020 have been removed from the rate
calculation by the state. New employers pay 1.0%, while new
out-of-state employers in certain industries pay as follows: 2.0% for
employers involved in the construction of buildings; 4.1% for
employers involved in heavy and civil engineering construction; and
2.8% for specialty trade contractors. The taxable wage base continues
at $13,500 for the third and fourth quarters of 2023 and is estimated
to remain $13,500 effective January 1, 2024. However, it could change
and notification will be at a later date.
The bill (amending Title 24, chapter 12, sections 302 and
308 of the Virgin Islands Code) replaces the reserve ratio
experience rating methodology with a payroll variation methodology
to determine employer unemployment Insurance tax rates beginning
January 1, 2024. With the new methodology, employers’ tax rates
will be based on changes in payroll for the preceding twelve
quarters. As an employer's payroll increases, the tax rate would
be lowered, and the converse for employers that have decreasing payrolls.
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.
Beginning in 2024, employers will pay remuneration on the
first $68,500 paid to each employee, up from $67,600 in 2023.
pandemic caused a depletion of state unemployment trust funds
used to pay unemployment benefits, prompting many states to take
action to mitigate potential increases in tax rates. After eight
years of declining SUI tax rates (on average), there was a
slight spike in 2021, then a leveling off in 2022 and 2023.
While it is prudent for employers to be aware of the direction
of SUI tax rates using indicators like state unemployment trust
fund balance trends, state legislative initiatives, and overall
economic conditions (all considered to be “uncontrollable
factors”), it continues to be important for employers to take
their own actions (“controllable factors”) to help keep SUI tax
rates and associated costs as low as possible by:
Diligently adjudicating unemployment claims
Auditing benefit charges and timely appealing those
that appear improper
quarterly contribution and wage reports are filed timely
Identifying and reconciling any outstanding
liabilities on state unemployment accounts
Utilizing available state-specific rating strategies
to help lower SUI tax rates (e.g., voluntary contributions,
joint account formation, negative write-off payments,
payroll variation elections, etc.
To keep up-to-date, please visit our Employer
Unemployment Insurance Resource Center. The site includes a 2024
Tax Guide intended to assist employers in identifying potential
risks associated with increases in SUI tax costs from 2023 to 2024
(e.g., changes in minimum and maximum SUI tax rates, changes in wage
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 the FUTA
Credit Reduction site published by the United States
Department of Labor (“DOL”) Employment & Training
Per data obtained from FiscalData
(an official website jointly created by the U.S. Department of the
Treasury and the Bureau of the Fiscal Service).
Per U.S. DOL, SUI Trust Fund Solvency Report for 2023
(issued March 2023). The Average High Cost Multiple (AHCM is
measured as the Reserve Ratio (Trust Fund as a % of Total Wages)
at the end of the calendar year immediately preceding the report
year, divided by the Average High Cost Rate. The Average High
Cost Rate is the average of the three highest calendar year
benefit cost rates in the last 20 years (or a period including
three recessions, if longer).
respective Unemployment Insurance Data Summary reports
published by the U.S. Department of Labor and data obtained from
(an official website of the U.S. Department of Treasury), and Average
Employer Contribution Rates by State.
Information obtained from sources considered to be reliable
(e.g., state legislative changes, state workforce agency
announcements, state surveys, etc.).
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
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