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Governor Ned Lamont and his team signed HB 6633. This bill is intended to restructure the Connecticut unemployment system to assure that the UI Trust Fund remains solvent in the event of another catastrophic unemployment event. This bill will take effect in 2024 and is said to save Connecticut almost 33 million dollars by 2027.

The Bill will do the following:

  • Freeze the Maximum Weekly Benefit Amount for 4 years
  • Raises the minimum earnings a claimant must make to be eligible for benefits from $600 to $1600 (with adjustments for inflation)
  • Raise the taxable wage base from $15,000 to $25,000 (with adjustments for inflation)
  • Reduce the maximum solvency tax rate from 1.4% to 1% (Trust Fund Replenishment)
  • Reduce the minimum and expand the maximum experience tax rate from 0.5-5.4% to 0.1-10%

What does this mean for employers?

In simple terms, the big picture is that employers will see a significantly lower tax rate in the years this bill is active.

The employer’s unemployment tax rate consists of a blend of 1) the individual employers charged (experience) rate and 2) Solvency Tax Rate (Unemployment Compensation Trust Fund). The experience rate was affected by HB 6633 by expanding the low-spectrum and high-spectrum scope in which Connecticut employers can be charged. As a Connecticut employer, you now have more room to lower your tax rate and cut Unemployment tax costs. The solvency tax rate was reduced, so your tax rate will, in turn, also be lower. Between drops in both rates, employers could see major unemployment tax savings.

HB 6633 raises the taxable wage base, which is better for employers as the employer is taxed on less employee income. This change alone is predicted to result in 1.25 million dollars in savings for the state of Connecticut.

Raising the minimum earnings which a claimant must make to be eligible for benefits ($600 to $1600) is a big win for employers because fewer claimants will be eligible to collect benefits. In general, this could show a direct effect on employers’ tax ratings as we will see fewer claimants collecting benefits, to begin with.

 

With this bill, a freeze on the maximum weekly benefit amount is also a big win for employers, limiting how much money a claimant is collecting when eligible.


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