The Tax Foundation (the nation’s leading independent tax policy nonprofit), recently released their rankings on the health of individual states unemployment tax health.

The foundation annually determines the health of each state’s business tax climate. They look at several factors determine their ranking, but one of their most heavily weighted taxes is the unemployment insurance tax in each state.  Unlike many taxes that employers may be subject to, unemployment insurance is one tax that an employer does have some measure of control.

While both federal (FUTA) and state (SUTA) unemployment insurance taxes exist, the state tax is the only one that an employer can have an impact on the tax paid. This is done by managing the unemployment claims that are filed by former employees and auditing unemployment charges and tax rates that are received. It sounds simple, but at CCC we find employers often don’t follow the proper procedures to maximize their savings and therefore minimize the payments they make to state unemployment agencies.

This lack of management is often due to the complexities of the programs in each state. While all 50 states have an unemployment tax system, how they operate differs greatly.  The Tax Foundation indicates “The least-damaging UI tax systems are those that adhere closely to the federal taxable wage base, have low minimum and maximum tax rates on each rate schedule, avoid levying their own surtaxes or creating benefit add-ons, and have simple experience formulas and charging methods. More harmful UI tax systems are those that have high minimum and maximum rates, wage bases that far exceed the federal level, complicated experience formulas and charging methods, and surtaxes or benefit add-ons that go beyond the core functions of the UI program.”

How does your state rate? Check out the Tax Foundations ranking here.

How can your organization protect your budget from excessively high unemployment taxes? Contact CCC to find out.


Contact CCC to see how we can save your organization time and money.
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