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Governor Kate Brown (D) signed into law HB 3389 on July 27, 2021.  The bill is intended to potentially lower unemployment tax rates for contributory employers in 2022, 2023, and 2024 as well as possibly defer a portion of  their unemployment taxes for 2021.

Under the bill, the components that made up an employer’s tax rate for the year 2020 will be used to calculate the 2022, 2023, and 2024 tax rates.  The reason for this is to exclude benefit charges related to unemployment claims filed during the COVID-19 pandemic.  Since the state’s calculation uses the last three years of taxable payroll and benefit charges on a July 1 through June 30 period, using the fiscal period for the 2020 tax rate for the next three years will ensure most benefit charges from the pandemic will not impact rates issue for 2022 through 2024.  When the 2025 tax rates are calculated, they will be based on the taxable payroll and benefit charges for the period July 1, 2021, through June 30, 2024.

Another benefit of HB 3389 to employers is the potential to defer some of their taxes for 2021.  For eligible employers, the plan allows them to defer one-third of their 2021 unemployment tax liability until June 30, 2022.  The plan also provides up to 100% forgiveness of the deferrable 2021 taxes based on how much an employer’s tax rate increased from 2020 to 2021.  Under the plan:

To be eligible for unemployment tax deferral and forgiveness, employers must meet all the following conditions:

While employers’ rates will be calculated from 2022 through 2024 based on their benefit charges and taxable payroll figures from the 2020 rate calculation, they may see fluctuations in their rates due to changes in the state’s rate schedule which may occur annually.  If you have questions about this notification or about any of your tax accounts, please contact your CCC Tax Analyst.


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