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Regional

Kentucky Passes Legislation Retroactively Lowering 2021 Unemployment Tax Rates

The Kentucky House of Representatives has passed House Bill 413, retroactively lowering 2021 unemployment tax rates for all employers in the state.

House Bill 413 was introduced on February 9, 2021 and the bill received full support from the Economic Development & Workforce Investment Committee as well as employers within the state who have seen a drastic increase in their state unemployment tax rates from 2020 to 2021.

HB 413 freezes the UI tax rate schedule at Schedule A for 2021; a decrease from the originally assigned Schedule E.  This allows rates to return to 2020 levels providing relief to all experience-rated employers.  Due to this change, tax rates will range from 0.30% to 9.00%.  The new-employer tax rate will remain at 2.70% for 2021.

Additionally, HB 413 will decrease the 2021 unemployment taxable wage base from $11,100 to $10,800.

One issue remains: Will the Kentucky Division of Unemployment Insurance be able to generate and issue revised 2021 tax rate notices for all employer prior to the first quarter 2021 filing and payment deadline of April 30, 2021?  In speaking with representatives at the Division, the expectation is to send out these revisions “in the next couple of weeks”.  In the absence of a revised tax rate notice reflecting the employer’s newly lowered rate for 2021, the Division has provided guidance indicating that employers should pay at their originally assigned rate under Schedule E.  That will generate an overpayment on the employer’s account and at that point, the employer can either use that overpayment toward future tax liabilities or a refund can be requested via the agency website.

As always, we will continue to monitor this situation and provide updates as they become available.  If there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

North Carolina Passes Legislation Retroactively Lowering 2021 Unemployment Tax Rates

The North Carolina Senate has passed Senate Bill 114, retroactively lowering 2021 unemployment tax rates for all employers in the state.

Senate Bill 114 was introduced in the February 17, 2021 General Assembly Session by the North Carolina Unemployment Oversight Committee.  This bill received full support from the North Carolina Division of Employment Security as well as employers within the state who have seen a drastic increase in their state unemployment tax rates from 2020 to 2021.  All this even though the NC DES excluded COVID-related benefit charges from the 2021 tax rate calculation.

SB 114 reduces the base contribution rate from 2.40% to 1.90% thus causing rates to fall back to 2020, pre-pandemic levels.  This may result in an unemployment insurance tax rate reduction of up to 0.50% for each active, experience-rated employer.  The North Carolina Department of Employment Security has begun recalculating tax rate based on this change and the target date of issuance is April 12, 2021.  Important items to note are as follows:

  • Employers who are affected by this change will receive a revised 2021 Tax Rate Notice by mail. For our clients, those revisions will be mailed to our office and we will send them out to you upon review and verification.
  • Employers whose tax rate for 2021 is already at the minimum rate allowed by law (0.06%) will not be affected by this change and will not receive a revised notice.
  • Employers whose tax rate for 2021 is already at the maximum rate allowed by law (5.76%) may or may not receive a rate reduction, depending on individual recalculation results.
  • Employers who have the new-employer rate (1.00%) will not be affected by this change and will not receive a revised notice.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

New York Unemployment Tax Rates Set to Rise in 2021

The New York Department of Labor announced that employers should expect unemployment tax rates to be higher in 2021 than in 2020.

Effective January 1, 2021, unemployment tax rates will range from 2.10% to 9.90% for experience-rated employers. Rates includes basic tax rates ranging from 1.50% to 8.90%, a subsidiary tax with rates ranging from 0.525% to 0.925%, and a reemployment service fund contribution rate of 0.075%. In comparison, tax rates in 2020 ranged from 0.60% to 7.90% for experience-rated employers.

The total tax rate for new employers is 4.10% for 2021, up from 3.20% in 2020.

Tax rates are determined with the schedule in effect when the size-of-fund index is less than zero.

New York’s unemployment taxable wage base is $11,800 for 2021, up from $11,600 in 2020.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Hawaii Revises 2021 Unemployment Tax Rates

In December 2020, we reported that employer tax rates were set to increase in Hawaii for 2021.  However, due to a bill signed on Mach 2, 2021 by Governor David Ige, Hawaii’s employers will not see as steep an increase as originally reported.

Under the measure (H.B. 1278), unemployment tax rates are to be determined with Schedule D and are to range from 0.20% to 5.80%.  The provision is retroactively effective to January 1, 2021.

Schedule D also is to be in effect for 2022, regardless of the solvency of the state unemployment trust fund.

Tax costs will still be higher in 2021 than in 2020 because rates for 2020 were determined with Schedule C, which generally has lower rates than Schedule D.  However, tax rates for 2021 initially were to be determined with Schedule H, the state’s highest unemployment tax rate schedule, for which rates range from 2.40% to 6.60%.

Additionally, for 2021 and 2022, unemployment benefit claims related to COVID-19 are to be excluded from the calculation of employers’ unemployment tax rates, which will also contribute to lower rates overall.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Texas Delays 2021 Unemployment Tax Rate Calculations

As the Texas Workforce Commission, Texas Legislature, and Governor of Texas explore opportunities to keep 2021 unemployment tax rates as low as possible for Texas employers, the issuance of the 2021 unemployment tax rate notices has been delayed to July.

Tax obligations are not to be suspended and employers will be notified of unemployment tax payment options in effect until rates for 2021 are finalized in the next few weeks. Below is the reporting and payment schedule set for 2021:

 

 

 

One other important change for 2021 is that voluntary contributions will not be in effect for 2021. Governor Abbott has suspended Section 204.048 of the Texas Labor Code, which set deadlines for a small subset of employers who make voluntary contributions into the UI tax system. The Commissioners in turn aligned TWC Policy with that decision.

Texas generally calculates an employer’s unemployment tax rate in effect for a calendar year based on benefit claims and payroll data as of September 30th of the preceding year.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Legislation Introduced Retroactively Lowering North Carolina 2021 Unemployment Tax Rates

The North Carolina Unemployment Insurance Oversight Committee has introduced a bill to retroactively lower 2021 unemployment tax rates for all employers in the state.

Senate Bill DRS35052 was introduced in the February 17, 2021 General Assembly Session and is still in draft form at the moment.  However, this bill is getting full support from the North Carolina Division of Employment Security as well as employers within the state who have seen a drastic increase in their state unemployment tax rates from 2020 to 2021.  All this even though the NC DES excluded COVID-related benefit charges from the 2021 tax rate calculation.

If passed, SB DRS35052 will reduce the base contribution rate from 2.40% to 1.90% thus causing rates to fall back to 2020, pre-pandemic levels.  Although this bill is still in its infancy, the NC DES has reportedly begun internal testing in order to issue revised, retroactive tax rate calculations upon its passage.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Maryland Unemployment Tax Rate Calculations to Exclude COVID-19 Claims

The Maryland Department of Labor, Licensing & Regulation announced that unemployment tax rate calculations for 2021 are to exclude unemployment benefits claimed during the COVID-19 outbreak in a measure signed February 15, 2021 by Governor Larry Hogan.

Under the measure (SB 496), the computation date July 1, 2019, is to be used to determine an employer’s unemployment benefit ratio if using that date would result in a lower benefit ratio and a lower unemployment tax rate.  The provision takes effect starting with unemployment tax rate calculations for 2022 and expires June 30, 2025.

The adjustment would effectively exclude unemployment benefit claims data from fiscal years affected by the pandemic and prevent future tax rates from increasing because of those claims.  Tax rates for 2022 are to be determined using the same benefit ratios used to calculate tax rates for 2020.

The July 1, 2019 computation date also was used to determine tax rates for 2021 to exclude benefit data from fiscal 2020 and to allow employers to maintain the same benefit ratio for 2021 as in 2020, under an executive order signed December 10, 2020.

The measure also allows employers with fewer than 50 employees to defer sending unemployment tax and wage reports for the first, second, and third quarters of 2021, until the deadline for fourth-quarter reports, which is Jan. 31, 2022.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Indiana Unemployment Tax Rates Hold Steady for 2021

The Indiana Department of Workforce Development has stated that the range of unemployment tax rates for 2021 will remain unchanged from 2020.

Effective January 1, 2021, unemployment tax rates are to range from 0.50% to 3.80% for positive-rated employers and from 4.90% to 7.40% for negative-rated employers. A solvency surcharge is not to be in effect for 2021.

The new employer unemployment tax rate will remain at 2.50% in 2021, unchanged from 2020.

The tax rate for new construction employers also is to be 2.50%, down from 2.53% for 2020.

Indiana’s unemployment taxable wage base is to be $9,500 for 2021, unchanged from 2020.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Montana Unemployment Tax Rates Hold Steady for 2021

The Montana Department of Labor has announced that unemployment tax rates are not to change for 2021.

Effective January 1, 2021, unemployment tax rates for experience-rated employers are to be determined with Schedule 1, with tax rate ranging from 0.13% to 1.60% for positive-rated employers and from 3.10% to 6.30% for negative-rated employers. These rates include the Administrative Fund Tax attributable to all employers; 0.13% for positive-rated employers and 0.18% for negative-rated employers.

Montana’s unemployment taxable wage base is to be $35,300 in 2021, up from $34,100 in 2020.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Arizona Unemployment Tax Rates Set to Rise in 2021

The Arizona Department of Economic Security announced that employers should expect unemployment tax rates to be higher in 2021 than in 2020.

Effective January 1, 2021, unemployment tax rates will range from 0.08% to 10.30% for positive-rated employers and from 10.87% to 20.60% for negative-rated employers. In comparison, tax rates in 2020 ranged from 0.05% to 6.42% for positive-rated employers and from 6.78% to 12.85% for negative-rated employers.

The tax rate for new employers is 2.00% for 2021, unchanged from 2020.

Arizona’s unemployment taxable wage base is $7,000 for 2021, unchanged from 2020.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.