Employers have begun to see some stability in unemployment taxes.   Unemployment rates for 2015 provided employers with decreased rate schedules and surcharges in more than half of the states and territories with eighteen states remaining the same, and only five states with increased rate schedules or surcharges.   Likewise, the taxable wage base in more than half the states remained the same. Kansas employers see the highest change with a $4,000 increase for 2015.   North Dakota and South Carolina were next with a $2,000 increase to their taxable wage base.  Florida decreased their taxable wage base from $8,000 to $7,000, and Oklahoma decreased their wage base from $18,100-$17,000. The average increase for taxable 2015 wage base was less than 2% on average across the nation.

Employers are quickly approaching the end of the computation period for the 2016 tax rates. The computation period in forty-one states ends on June 30, 2015.   The benefit charges, contributions, and taxable payroll will be closed, and the rate schedules and taxable wage bases will be established. Since the quarterly contribution returns are not filed and paid until the end of July and the benefit charges generally take until August or September to be finalized, the release of the trust fund balance totals are usually around August or September which dictates the rate schedules and, in the indexed states, the taxable wage base for the following year.   Most legislation will take place from June – November for the 2016 rate year.

At this point, an exact estimation of what will occur for the 2016 rate year is anyone’s guess. An evaluation of trends, however, is feasible.   Unemployment claims have reduced, and employers have begun to increase their employee counts, which allow the trust fund balances to become healthier. That usually drives the rate schedules and surcharges downward.   Let’s evaluate some other circumstances. With the exception of California, the Title XII loans have reduced tremendously and will disappear over the next few years as long as the economy remains stable.   The Average High-Cost Multiple, an equation the federal government arrived at a few years ago, increases to 0.7 for 2016 and increases each year by 0.1 each year until it reaches 1.0 for all states by 2019. Since the penalty for not reaching the goal each year is the fact that the state cannot get an interest free Title XII loan, the threat is low and states have time to continue building their trust funds through changes in legislative changes to their taxable wage base and the duration a claimant can collect.

A good estimate to currently use for 2016 rate increases is 10% nationwide, and the taxable payroll increases will probably account for no more than a 5% increase.   These numbers are good estimates as long as the claims, and the number of employees has remained constant.   If you find that you need a more accurate estimate based on the experience earned for a particular account, please contact your Tax Analyst, and they can let you know what is available and the data that might be needed. For most of our clients, the data is collected from the state or the Payroll Manager within your organization.


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