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Kentucky Passes Legislation Retroactively Lowering 2021 Unemployment Tax Rates

By April 6, 2021January 17th, 2022COVID-19, Tax Implications

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

Josh Kendall

Author Josh Kendall

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