How To Prepare For 2018 Unemployment Tax Adjustment Rates

How To Prepare For 2018 Unemployment Tax Adjustment Rates

The fourth quarter of 2017 is near, which means that more states will begin revealing the new rates for unemployment tax which is expected in 2018. States may alter their unemployment tax so that they can maintain the balance of their trust fund. Below are some things employers should know so that they’re prepared.

The unemployment tax is federally mandated and imposes a tax on employers which are used for the purpose of funding workforce agencies. Employers are expected to send this tax yearly, usually by completing Form 940 which is then transmitted to the Internal Revenue Service. The unemployment tax will cover a portion of unemployment insurance administration, as well as job service systems in each state. It also pays a portion of unemployment benefits which are extended, but like most taxes it is subject to change over time.

How Unemployment Taxes Are Structured

Some states will set up a single range for tax rates, which is referred to as a rate table or schedule. From these every employer is given a rate which is determined by their unemployment in association with their yearly payroll. Other states instead maintain multiple schedules, which are determined by the balance of their trust fund. Those which are expected to finalize their unemployment taxes for 2018 include South Dakota, New Hampshire, Wisconsin, Oklahoma, Georgia and Arkansas.

Variations For A Single Schedule

Oklahoma and Georgia both have multiple schedules which are determined upon a primary group of rates. Georgia actually uses 6 schedules which are essentially altered versions of the primary schedule, where every schedule denotes a percentage for which the employer’s primary tax rate schedule may be adjusted.

Oklahoma could utilize basic rates from either one of the four factors which are conditional, or from the unadjusted range which is 0.1 to 5.5 percent. The conditional factors will typically go into effect whenever the state’s trust fund balance is beneath a specific level. Every factor which is conditional will denote assessments which will be added for the tax rate of every rate group.

States Which Use A Single Schedule

New Hampshire and Arkansas both have a single set of rates for employers that are experienced, and for the most part these rates won’t change. Additional surtaxes, rate reductions or assessments can be applied to the basic rate of employers depending on trust fund balance and whether the employer has a negative or positive rating.

South Dakota and Wisconsin

Both Wisconsin and South Dakota will use multiple schedules. These schedules will go into effect based on the balance of the trust fund for unemployment. South Dakota is expected to select rates from up to two schedules for the very first time next year, under measure H.B. 1097 which was signed in March by Governor Daugaard.  To learn more about unemployment taxes which are scheduled for release in 2018, review the Unemployment Insurance Chart.