Unemployment Insurance tax reforms pursued by NFIB in the fall of 2011 will bear fruit this year. The Unemployment Insurance
Agency has announced that beginning with the third quarter of 2015, Michigan’s
employers will pay less in unemployment taxes due to a reduction in the state’s
Taxable Wage Base. NFIB worked to pass Senate Bill 806 in 2011 that included a provision that would reduce the taxable wage base for non-delinquent
employers when the balance in the
Unemployment Compensation Fund
reaches $2.5 billion.
Beginning with third quarter tax filings in October, Michigan’s
Taxable Wage Base will decrease to $9,000 from its current rate of $9,500. The
reduction translates to about $16 million less in taxes assessed during 2015,
and $57 million less assessed during 2016, assuming the Taxable Wage Base stays
at $9,000 throughout 2016.
“This is great news for job providers, families and our entire
economy,” said Gov. Rick Snyder. “When businesses can save money on their taxes
it can mean retaining jobs, expanded opportunities and even the hiring of more
employees.”
The Taxable Wage Base is the annual amount of wages paid by an
employer to an employee that are subject to state unemployment insurance taxes.
These contributions fund unemployment benefits for employees who lose their jobs
through no fault of their own.
In 2011, legislation was enacted to ensure adequate funding for
the state’s Unemployment Trust Fund. It specifies that when the trust fund
balances reaches $2.5 billion, and is expected to remain at that level for two
consecutive quarters, the Taxable Wage Base will automatically decrease to
$9,000. That condition has been met for the third quarter of 2015.
“It’s very encouraging that the Taxable Wage Base is being
lowered due to a healthy trust fund,” said Stephanie Comai, director of the
Talent Investment Agency. “This not only keeps unemployment insurance taxes
manageable for employers, but helps to strengthen Michigan’s economy as well.
Equally important is the fact that a solvent trust fund also ensures that temporary
funds are available for unemployed workers while they seek new jobs.”
The new Taxable Wage Base rate of $9,000 applies to contributing
employers who pay unemployment taxes and who are not delinquent in paying
unemployment contributions, penalties or interest.
