Welcome to March, business owners!
Now is a great time to make sure everything is in order before quarter-end.
Why?
Because a majority of states update the unemployment rate in the first quarter, it's always a good idea to verify your rate is accurate. First quarter is also a time period when taxable wages are highest and therefore amount due is highest. If a wrong rate is used it could mean higher penalties.
This article serves as your reminder to verify that your state unemployment rate is correct for tax purposes.
First, the basics.
"Businesses are assigned a state unemployment rate annually by the state in which they operate," explained Anna Marie DiStefano, Manger, Tax & System Compliance at PrimePay. Each state is different – see the list below. "This rate determines how much state unemployment tax the employer must pay for each employee until the employee reaches that state’s annual unemployment limit. This also changes annually and is different for every state," she explained.
If you are a new business and you haven’t been assigned a rate yet, you should follow the new employer section in the list below.
Why your payroll company needs the rate.
When you contract with a payroll provider, they this unemployment rate so that they can file for you in the proper amount as the tax is determined based on the assigned rate issued by the state unemployment agency.
What happens if the rate is wrong?
If you don’t verify that your unemployment rate is correct, there’s a chance that you could underpay funds for the first quarter. If that happens, it may result in higher rates in the future.
For quick reference, here’s a list of all the states and the unemployment rate for 2019. As always, you can visit our Quick Wage and Tax Guide portal for more information on each state and download the guide and keep a copy for yourself.
Alabama
New employers: 2.7%
Experienced employers: 0.65%-6.80%*
*Includes 0.6% stabilization tax.
Alaska
New employers: 1.28%
Experienced employers: 1.0%-5.4%
Arizona
New employers: 2.0%
Experienced employers: 0.04%-11.8%
Arkansas
New employers: 3.2%*
Experienced employers: 0.4%-14%
*Includes 0.3% fund-stabilization surtax.
California
New employers: 3.4%*
Experienced employers: 1.5%-6.2%**
*Plus 0.1% employment training tax.
**Plus 0.1% employment training tax assessed on most employers.
Colorado
New employers: 1.7%
Experienced employers: 0.62-8.15%
Connecticut
New employers: 3.4%
Experienced employers: 1.9%-6.8%*
*Includes 1.4% fund solvency surtax.
Delaware
New employers: 1.5%
Experienced employers: 0.3%-8.2%
District of Columbia
New employers: 2.7%*
Experienced employers: 1.6%-7.0%*
*Plus 0.2% administrative funding assessment.
Florida
New employers: 2.7%
Experienced employers: 0.1%-5.4%
Georgia
New employers: 2.7%
Experienced employers: 0.04%-8.10%
Hawaii
New employers: 2.4%
Experienced employers: 0%-5.6%
Idaho
New employers: 1%
Experienced employers: 0.251-5.4%
Illinois
New employers: 3.175%
Experienced employers: 0.475-6.875%
Indiana
New employers: 2.5% & Misc.
Experienced employers: 0.5%-7.4%
Iowa
New employers: 1.0%
Experienced employers: 0.0%-7.5%
Kansas
New employers: 2.7%
Experienced employers: 0-7.1%
Kentucky
New employers: 2.7%
Experienced employers: 0.225-8.925%
Louisiana
New employers: 1.18-2.94%
Experienced employers: 0.1-6.2%
Maine
New employers: 1.89%*
Experienced employers: 0.06-5.46%*
*Includes 0.06% competitive skills scholarship fund rate.
Maryland
New employers: 2.6%
Experienced employers: 0.3%-7.5%
Massachusetts
New employers: 2.42%
Experienced employers: 0.83%-12.65%
Michigan
New employers: 2.7%*
Experienced employers: 0.06%-10.3%
*Plus 1/3 chargeable benefits component.
Minnesota
New employers: Industry Average
Experienced employers: 0.1%-9.0%
Mississippi
New employers: 1.36%*
Experienced employers: 0.2%-5.6%
*First year is a 1% rate, second is 1.1%, and third is 1.2%. All include above assessment rate.
Missouri
New employers: 2.376%
Experienced employers: 0%-9.45%
Montana
New employers: 1% to 2.4%
Experienced employers: 0.13%-6.3%
Nebraska
New employers: 1.25%
Experienced employers: 0.0%-5.40%
Nevada
New employers: 3%*
Experienced employers: 0.3-5.40%*
*Includes a Career Enhancement Program (CEP) fee of 0.05%. Those paying 5.4% aren't subject to CEP fee.
New Hampshire
New employers: 1.2%
Experienced employers: 0.1%-7.0%*
*Effective Q1, 2019; includes variable administrative contribution rate.
New Jersey
New employers: 2.8%
Experienced employers: 0.4%-5.4%
New Mexico
New employers: 1% or industry rate - whichever is greater.
Experienced employers: 0.33%-5.4%
New York
New employers: 3.6%*
Experienced employers: 1.3%-9.1%*
*Includes .075% re-employment service fund rate.
North Carolina
New employers: 1.0%
Experienced employers: 0.06-5.76%
North Dakota
New employers: 1.21%
Experienced employers: 0.15%-9.75%
Ohio
New employers: 2.7%
Experienced employers: 0.3%-9%
Oklahoma
New employers: 1.5%
Experienced employers: 0.1%-5.5%
Oregon
New employers: 2.4%
Experienced employers: 0.9-5.4%*
*Includes .09% special payroll tax offset.
Pennsylvania
New employers: 3.689%
Experienced employers: 2.39%-11.03%
Puerto Rico
New employers: 2.9%*
Experienced employers: 1.4-5.4%
*Plus 1.0% job development tax - for most employers.
Rhode Island
New employers: 1.46%
Experienced employers: 1.1-9.7%
South Carolina
New employers: 0.87%*
Experienced employers: 0.06%-5.46%*
*0.06% contingency assessment included.
South Dakota
New employers: 1.25% - First year. 1% - Second and third year.*
Experienced employers: 0%-9.35%
*Plus 0.55% investment fee.
Tennessee
New employers: 2.7%*
Experienced employers: 0.01%-10%*
*Effective 1/1/19 - 6/30/19.
Texas
New employers: 2.7%
Experienced employers: 0.36-6.36%
US Virgin Islands
New employers 2.0%
Experienced employers: 1.5%
Utah
New employers: Industry average
Experienced employers: 0.1%-7.1%
Vermont
New employers: 1%
Experienced employers: 0.08-6.5%
Virginia
New employers: 2.5%*
Experienced employers: 0.11%-6.21%*
*0.01% pool cost charge included.
Washington
New employers: Industry Average
Experienced employers: 0.13-7.73%
West Virginia
New employers: 2.7%
Experienced employers: 1.5%-8.5%
Wisconsin
New employers: 3.05-3.25%
Experienced employers: 0-12.0%
Wyoming
New employers: Industry Average
Experienced employers: 0.34%-8.84%
For PrimePay clients:
We’ve obtained your rate directly from the state! So it’s likely that you don’t have to do anything. But it’s a great idea to double check this rate just to be sure it’s entered correctly. You can find this information on your payroll journal. Questions? Please reach out to your Client Success Representative.