Contribution Rates

Contribution Rates

Contribution Rates Explained

Beginning in 1992, an employer's contribution rate is based on the multi -schedule contribution rate system shown below in Table 2. The contribution rate schedule to be used depends on the ratio of the current rserve fund to the adequate reserve fund.

Employers are advised of their individual contribution rate in March of each year. Contribution rates are based upon the ratio of the employer's reserve balance to your average annual payroll. You can find your contribution rate by finding the tax rate associated with your reserve ratio in the multi-schedule contribution rate system shown in Table 2. All rates are in percentages.

Under the experience rating plan, an employer may be eligible for a reduced rate if certain conditions are met after the account has been chargeable with benefits for the 12-month period prior to the rate computations date (December 31). In March a Contribution Rate Notice is mailed to each employer. The notice for the calendar year will show the tabulation for the average annual taxable payroll, beginning contribution reserve balance, contributions paid, benefits charged to the employer during the previous year and the ending contribution reserve balance. The notice will also show the tabulation for the employer's reserve ratio. The reserve ratio is obtained by dividing the reserve balance at the end of the year by the average annual taxable payroll for the past three years. By applying the Reserve Ratio to the Effective Contribution Rate Schedule, the employer's contribution rate is determined.

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New Employer Contribution Rate

The contribution rate for new or newly covered employers will be the same as the contribution rate assigned to employers with .0000 reserve ratio. See Table 1 for the current rate.

Tax Base

The taxable portion of an employee's annual wages is limited to the "tax base" for that calendar year. An individual employee's wages in excess of the "tax base" are not taxable. The "tax base" is equal to the State's average annual wages of employers contributing to the unemployment trust fund and is computed at the beginning of each calendar year. Act 110 reduced the tax base for 2008, 2009, and 2010 to $13,000.00 so long as the balance of the unemployment trust fund does not fall below the adequate reserve fund. See Table 1 for the current tax base.

Employment & Training (E&T) Assessment

Each employer, with a contribution rate greater than zero and less than 5.4% is liable for an employment and training assessment on taxable wages. To determine the E&T amount due, the total taxable wages is multiplied by the assessment rate. No portion of the State E&T assessment will be credited to the employer's reserve account. The E&T assessment amount cannot be taken as a credit against the Federal unemployment tax (FUTA). See Table 1 for the current rate.

Example for 2009: