Beginning in the third quarter of 2015, the taxable wage base in Michigan will decrease, meaning that the unemployment taxes businesses pay will also go down. 

Lower taxable wage base announced in July
The change was first announced by The Michigan Unemployment Insurance Agency in mid-July, and confirmed at the end of the month. The taxable wage base is the annual amount of wages a business pays to any staff member who is subjected to state unemployment insurance taxes. The unemployment tax that an employer pays is determined by taking the wages of each covered worker up to the taxable wage base, and multiplying that number by the business' annual unemployment tax rate. If the taxable wage base decreases, the amount that the employer is obligated to pay will also fall.

"This is great news for job providers, families and our entire economy," Gov. Rick Snyder explained in a press release. "When businesses can save money on their taxes it can mean retaining jobs, expanded opportunities and even the hiring of more employees." 

"The taxable wage base will drop to $9,000 from $9,500."

2011 legislation designed to pull taxable wage base back down
The decreased taxable wage base came as a result of legislation from 2011. It stated that when the Michigan UI Trust Fund hit $2.5 billion, and was expected to remain at or above that threshold for two quarters, the taxable wage base would automatically be cut to $9,000. The legislation was designed to ensure that the fund would stay adequately full, while keeping the UI taxes that employers pay affordable. 

The taxable wage base drop to $9,000 from $9,500 will help employers save plenty of money. Ultimately, businesses will pay about $16 million less in UI taxes in 2015, and $57 million less through 2016. This brings that state's taxable wage base back to what it was in 2008, according to a National Employment Law Project briefing paper. Back then, the state's fund balance was around $31.1 billion, and was noted to be "fac[ing] immediate UI trust fund solvency challenges."

The lower UI taxes will officially take effect at the start of October. It will not apply to employers who are delinquent in paying unemployment contributions, penalties or interest.

"It's very encouraging that the Taxable Wage Base is being lowered due to a healthy trust fund," Stephanie Comai, director of the Talent Investment Agency, stated in a press release. "This not only keeps unemployment insurance taxes manageable for employers, but helps to strengthen Michigan's economy as well. Equally important is the fact that a solvent trust fund also ensures that temporary funds are available for unemployed workers while they seek new jobs."

At Corporate Cost Control, we work closely with employers across the country to better manage the nuances of unemployment insurance. Legislation changes on the state level could impact you today, and we welcome any questions or concerns you may have on a wide range of topics.

Contact CCC to learn how we can save your organization time and money (800) 207-6926

Latest News