Employment
tax to fallAverage contributions to
the unemployment insurance
fund will decrease next year
The state Department of Labor and Industrial Relations said yesterday it will lower the unemployment insurance tax schedule for employers who contribute to the Unemployment Compensation Trust Fund, which should lower the average tax rate for companies.
The contribution rate will go from schedule D to schedule C. The lowering of the tax schedule means that for calendar year 2004, employer contributions will range from nothing to 5.4 percent instead of 0.2 percent to 5.4 percent under schedule D. The estimated average tax rate is expected to drop from 1.7 percent this year, to 1.2 percent in 2004.
The taxes ensure the solvency of the fund that pays unemployment benefits.
Dan Takazawa, chief of the employer services section at the unemployment insurance division, said the adequacy of the fund is reviewed every year by law. Depending on the strength of the fund, the department picks one of eight schedules, A through H, with H requiring the largest contribution.
Takazawa said it's not clear yet how much employers will save.
"March is when the rates go out. It's a calendar year, but to determine the employers' experience, we still need their fourth quarter results to determine what the 2004 rate will be," he said.
Employers have until Jan. 31 to file their 4th quarter returns, Takazawa said.
Regardless of their rate, Takazawa said all employers must still file with the department.
"Even if some employers may have a zero rate, they still have to file with the department otherwise they get charged the maximum rate of 5.4 percent," he said.