Legislation signed by Governor Ned Lamont on July 12, 2021 states that Connecticut’s unemployment taxable wage base is set to increase in 2024 and will be adjusted annually starting in 2025.
Under the measure (H.B. 6633), effective January 1, 2024, the taxable wage base is to increase to $25,000. This is an increase from $15,000, the taxable wage base in Connecticut since 1999. Effective starting with the wage base determined for 2025, the wage base is to be indexed to average wages for inflation purposes.
The measure also temporarily changes the look back period used to calculate employers’ unemployment experience ratings.
The experience period generally consists of payroll and unemployment benefit charge data from the three consecutive years ending June 30 preceding the computation date. However, the experience rating period is to be one year for unemployment tax rate calculations for 2026, and two years for 2027.
Additionally, effective January 1, 2024, employers are not to be charged for unemployment benefits claimed through the state’s shared work program during periods of high unemployment.
The measure also caps the fund-solvency tax at 1.00% starting in 2024, down from 1.40%. The maximum fund-solvency surtax would be 0.50% in a period of economic recession.
Although there are several components of this measure that would appear to be favorable to employers and ultimately lower their tax rates in future years, the increase in taxable wage base will prove to either neutralize those benefits or exceed them altogether; thus resulting in higher overall unemployment tax payments.
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 for the latest news and updates.