Thursday, February 17, 2011

Unemployment Taxes Reduced for Most Employers

Great news! The state Legislature has passed Gov. Gregoire’s proposal to reduce unemployment tax rates for most employers in Washington beginning this year.

Our state has one of the healthiest unemployment funds in the country, yet the tax formulas in state law were triggering substantial tax increases for employers in 2011. The Governor asked the state Legislature to revise the tax formulas to reduce tax rates – and to vote on it early in the legislative session so the lower rates could take effect this year.

The legislation was the first bill to pass and be signed by the Governor this year. It succeeded due to considerable collaboration, spurred by a shared concern for how businesses and jobless workers have been affected by the recession. Not only was it adopted quickly, but it received almost unanimous votes in both the Senate and House.

As a result, tax rates for 2011 will be reduced for 90 percent of Washington employers, and about half of them will pay lower rates than in 2010. The reduction will save all employers $300 million in 2011, and an estimated $360 million from 2011 through 2017.

Employment Security will recalculate tax rates and send new tax-rate notices in March to replace the ones sent to employers in December 2010. Employers do not have to request an updated tax-rate notice; all employers will receive one in the mail.

The legislation also made some changes to the benefits side of the unemployment insurance system. It continues federally funded extended benefits through the end of 2011, makes the Training Benefits Program more accessible, and provides a temporary, $25 benefit increase for workers who file new unemployment claims during an eight-month window this year.

For more details about the tax reduction and benefit enhancements contained in the legislation, read Employment Security’s fact sheet.

By Paul Trause, Employment Security Commissioner

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