On October 4, the Department of Labor announced that, beginning January 1, 2019, employers will see a reduction in the taxable wage base amount that they currently pay on unemployment taxes by $2,000.
Nearly 22,600 employers remit state unemployment taxes to the Department of Labor on an annual basis. These taxes are deposited into the Unemployment Insurance Trust Fund and are used for the payment of unemployment insurance benefits to eligible claimants. The unemployment trust fund is “forward-funded,” meaning tax schedules are designed to raise more funds during periods of economic growth to ensure that there is adequate funding during economic recessions. The Department moved to Tax Rate Schedule III in July of 2018, which triggered a reduction in unemployment insurance tax rates for employers starting July 1, 2018. The additional reduction in the taxable wage base announced today was also triggered by the move to the Tax Rate Schedule III and is effective January 1, 2019.
This mechanism was part of the 2010 UI reform package negotiated by AIV and key legislators, regulators, and labor representatives.
For more information regarding tax schedules and rates, please visit the Department of Labor’s website: http://labor.vermont.gov/unemployment-insurance/employers/ui-tax-rates/