Twenty-three states have altered their unemployment insurance taxable wage bases for 2019. Only two of the states lowered their wage base.
State unemployment insurance taxes are individually assigned to each employer every year, and states use their own unique experience-rating systems to determine an employer’s tax rate. Although these systems vary in how they’re actually administered, they try to assign lower tax rates to employers who have lower turnover and fewer involuntary terminations and higher rates to employers who have a higher turnover rate and more involuntary separations.
The unemployment taxable wage base is the maximum amount of earned income upon which employers must pay unemployment insurance taxes. It varies from state to state.
Nonprofits Have Other Options
The above applies to most employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes – high or low. Even with decreases in unemployment insurance taxes, many organizations are overpaying their unemployment liability. Recent analysis of 501(c)(3) employers reveals that 86% are overpaying into their state unemployment insurance program.
You can calculate your organization’s unemployment insurance overpayment at http://www.501c.com/overpayments/.
Contact us today for more information concerning your nonprofit unemployment insurance tax advantages.