Employers Benefit from Lowest Possible Unemployment Insurance Tax Rates Allowed
Governor Larry Hogan recently announced that beginning in the first quarter of 2017, Maryland employers will continue to benefit from the lowest possible unemployment insurance tax rates allowed under state law. The Maryland Department of Labor, Licensing and Regulation is able to offer this advantageous rate due to declining unemployment and, consequently, lower unemployment benefit payments.
In 2017, the range of rates will be from 0.3 percent to 7.5 percent. The rate for new employers in 2017 will be 2.6 percent. An exception is the rate for new construction employers headquartered in another state, which will be 6.6 percent. The taxable wage base for 2017 will remain at $8,500.
“Growing Maryland’s economy is our administration’s number one priority,” said Governor Hogan. “By improving our state’s business climate, employers are able to benefit from a continued low unemployment insurance tax rate, which allows them to create even more jobs and opportunities for our hard working citizens.”
Maryland recently reached an all-time high, historic number of employers doing business in Maryland, 146,300 employers in the state – an additional 7,000 businesses since January 2015.
“As the unemployment rate decreases, not only are more Marylanders working, but the amount of state benefits paid also decreases,” said Maryland Labor Secretary Kelly M. Schulz. “Under the direction of the Hogan administration, employers are able to thrive and create jobs, as the state and business community work together to continue strengthening our economy.”
According to the latest federal report, Maryland’s unemployment rate is at an eight-year low of 4.2 percent. Benefits paid dropped nearly $80 million between fiscal year 2015 and fiscal year 2016.
Given most Maryland employers pay the minimum tax rate, many companies will continue to pay $25.50 per employee per year. Since September 30, 2015, Maryland’s Unemployment Insurance Trust Fund has grown by more than $94 million to nearly $1.1 million as of September 30, 2016.
The Maryland Unemployment Insurance Program is financed by the Federal Unemployment Tax Act (FUTA) and is administered by the Maryland Department of Labor, Licensing and Regulation. As required by Maryland law, the Division of Unemployment Insurance does an annual “temperature check” on the Unemployment Insurance (UI) Trust Fund. This temperature check is made using the ending balance of the Trust Fund every September 30. The reconciled ending balance is compared to the taxable wage base for the preceding four quarters. That ratio determines the UI Rate Table for the next calendar year.