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State Unemployment Tax

As the summer comes to a close, the states will begin to release further information concerning their 2021 Taxable Wage Base, Rate Schedules as well as other tax cost changes slated for the upcoming tax year. Certain states have already "locked" in their rate schedules for 2021 in order to limit potential tax rate increases(IN, IA as examples), and we expect other similar actions form other states as the impact of the pandemic is more clearly understood. As more information comes out ValeU Group will continue to update this website with additional information.


2021 Rate Schedules:

The four "Fiscal Year" states have all issued their 2020/2021 Tax Rate Schedules. New Jersey will be keeping the same schedule as last year, with Vermont using a lower Rate Schedule for the upcoming year.

New Hampshire, another Fiscal Year State, will be adding an Emergency Power Surcharge of 0.50% for the 3rd quarter 2020 as well as removing the Fund Balance Reduction of 1.00%. For the 4th quarter the EPS will increase to 1.00%.

Tennessee, the last of the Fiscal States, will be using Rate Schedule 6 for 2020/2021, the same as the previous year.

Indiana will reduce their number of rate schedules and "locked" in Rate Schedule C for 2021 to 2025. The range of assigned tax rates will stay the same as 2020(0.50% to 7.40%),

Iowa will "lock" in their current rate schedule for 2021.

Pennsylvania will keep the same schedule and rate factors as 2020 for 2021.

South Dakota will also be using the same rate schedule for 2021.


Unemployment Claims


COVID-19 Benefit Charge Relief

States continue to address the issue of charging employers due to the COVID-19 pandemic and resulting economic shutdown. Currently all but 8 states have agreed to Benefit Charge relief for employers that were impacted by the pandemic. Please refer to the ValeU Group AllState Chart for further information.


Lost Wages Assistance Program

With the expiration of the $600 per week Federal Pandemic Unemployment Compensation (“FPUC”) payment, the Federal Government has enacted the Lost Wages Assistance Program which will be funded by FEMA and distributed by the individual states. The states must apply for assistance from FEMA to receive the funds, and currently 40 states have applied and been granted access to the funds. As of September 3, 2020, 40 states have been approved for participation in the program. Below is a list of the states along with D.C that have yet to be approved for participation in the program.


D.C. Delaware, Illinois, Kansas, Nebraska, Nevada, New Jersey, North Dakota, South Carolina, and Wisconsin


South Dakota will not be participating in the program.


States may also contribute an additional $100 from their own funds, and currently only Kentucky and Montana have confirmed they will provide the additional payment .


Below is a link to the FEMA website:

https://www.fema.gov/disasters/coronavirus/governments/supplemental-payments-lost-wages


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  • ValeU Group

As the 2021 Tax Rate season begins, ValeU Group has been analyzing the impact the COVID-19 Pandemic is anticipated to have on our clients as well as on the Unemployment Tax industry as a whole.

With the “fiscal” year states(NH, NJ, VT, and TN) beginning to issue their 2020/2021 Tax Rates in the upcoming months, we wanted to provide an overview of the potential Tax Rate increases.


ValeU Group Client Effective Rate

In the chart below, we show the combined State Unemployment Insurance(SUI) Effective Tax Rate for all our ValeU Group clients. The SUI Tax effective rate has declined each of the past three years, however is expected to increase significantly for the upcoming 2021 Tax Year.


ValeU Group Client Tax Cost Per Employee

As with the Client Effective Rate, the combined ValeU Group client SUI Cost Per Employee has also decreased over the past three years and is expected to increase for 2021.


Reasons for Projected Increase

The causes of the projected increase are obviously due to the COVID-19 Pandemic. In almost all states, the 2021 Tax Rates will increase as a result of the depletion in State Unemployment Trust Funds due to the enormous amount of benefits being paid as a result of the COVID-19 Pandemic. We have put together the following chart showing the Estimated State Unemployment Insurance Trust funds as of July 10, 2020 compared to the SUI Trust Funds on April 15, 2020.

While over 30 states originally agreed to not charge employers directly for any COVID-19 related charges, the overwhelming benefits collected have depleted state trust funds resulting in some states looking at adding stipulations to granting employers from the “Relief of Charges”. The depletion of the state trust funds will have an indirect impact on all employers as a result.

In addition, in the states that will charge employers directly for their COVID-19 Related claims, the increase in tax rate could be severe even with only one quarter of charges impacting most 2021 Tax Rates.


2021 Tax Rate Projections

It is important for all employers to be aware of the potential Tax Cost increase most will incur for 2021, and why Rate Projections are critical at this time.


Please contact your Account Executive if you would like further information.

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