Connecticut’s unemployment tax rate calculations are being updated to reduce the impact of pandemic-related unemployment benefit claims under a measure signed May 3, 2021 by Governor Ned Lamont.
The measure (H.B. 5377) is effective starting with unemployment tax rates determined for 2022 and calls for unemployment benefits charged from July 1, 2019 to June 30, 2021 to be excluded from the calculation of tax rates for experience-rated employers.
Additionally, starting in 2022, the tax rate for new employers is to be calculated without regard to unemployment benefits charged in calendar years 2020 or 2021.
Excluding unemployment benefits charges from tax rate calculations is a strategy employed by many other states with the goal of preventing employers’ tax rates from increasing because of those benefits. Having said that, it will be important to note that in other states where this approach has been used, tax rates have still increased as a result of uncontrollable factors such as additional surcharges, etc. There is no mention of this in H.B. 5377 but depending on the level of the state’s trust fund balance, an overall increase in tax rates to employers is a real possibility despite this legislation.
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.