October 4, 2023
First major Massachusetts tax cut in over a decade: Top 5 Things You Need to Know
After months of negotiations, the Massachusetts state legislature has finally agreed to pass a tax package that provides…Read More
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Posted on January 8, 2024
Have you heard anything about our Unemployment Insurance rates for 2024?
Massachusetts recently announced that unemployment insurance (UI) costs will be based on schedule “C” in 2024.
This is an increase from schedule “A” in 2023. UI schedules are adjusted annually depending on the Unemployment Insurance Trust Fund balance and projected income and payouts throughout the year.
Individual employer rates are adjusted based upon specific experience with the unemployment system. The more employees an employer lays off and the longer they collect unemployment the higher that employer’s unemployment insurance taxes will be for the following year.
The solvency charge is also going up slightly this year from 0.37% to 0.41%. The solvency charge is assessed against all contributory employers and pays for benefits that the Massachusetts Department of Unemployment Assistance (DUA) determines should not be charged directly against an employer’s individual account.
While the increases noted above represent bad news for employers, there is some good news to offset that. The federal government last year imposed a special Covid-19 assessment to cover the cost of borrowing by states during the pandemic. The initial charge was $915 million for 2023. It will decrease to $365 million in 2024. This charge is only assessed against private contributory employers.
Impact of Schedule change
In the case of employers that make quarterly contributions to their individual trust fund account, the employer’s UI charge will be tied to the employer’s current trust-fund balance. The less frequently an employer utilizes its UI account throughout the year, the lower the UI charge will be for the employer. Conversely, an employer that uses its trust fund account to pay out more benefits due to frequency of layoffs will be assigned a higher UI charge.
Under schedule C, employers’ UI charges will range from 0.73% at the maximum positive end of the schedule to 11.13% at the maximum negative end of the schedule. The UI schedule is available for review on the DUA website.
Employers are taxed for UI purposes only on the first $15,000 of an employee’s wages, meaning that companies that pay on a quarterly basis throughout the year typically pay the largest portion of their contribution in the first and second quarters of the year.
A small group of employers that are either non-profits or governmental entities have the option to participate in the reimbursable program. Organizations that elect reimbursable status do not contribute on a quarterly basis but rather pay UI taxes only when the entity incurs a cost due to a layoff. A downside for employers who opt for the reimbursable program is that they are ineligible to participate in the solvency account or programs such as the Covid payment that was available to contributory employers during the early days of the pandemic.
AIM members with questions about this or any human resources matter may contact the AIM helpline at 1-800-470-6277.