Kentucky is reducing its unemployment insurance tax rate for the first time since 2008. The reduction occurred because the Commonwealth returned its unemployment insurance trust fund to a healthy pre-recession balance – $220 million.
Legislation passed by the Kentucky General Assembly in 2010 created new benefit levels and taxes on employers to help restore the unemployment trust fund. The law also set for a freezing of the taxable wage base to $10,200 for four years and a reduction of the tax increases once the fund was restored.
As a result of the new balance, the unemployment tax schedule in Kentucky will drop to rates ranging from 0.6 to 9.75 percent, down from the previous rates of 1 – 10 percent. The new rates go into effect in 2017. The new rates will save Kentucky employers over $50 million annually.
“The remarkable rebound that we have seen in our unemployment insurance trust fund is directly attributable to the substantial growth and investment by Kentucky businesses and the actions of forward-thinking leaders to return the fund to solid footing,” said Education and Workforce Development Cabinet Secretary Hal Heiner. “Shared sacrifice on the part of everyone involved is paying off now and sets us on a great path for the future.”
Individuals and employers can find full details about UI at Kentucky’s Electronic Workplace for Employment Services — www.KEWES.ky.gov.
Nonprofits have options
The above applies to all Kentucky employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes – high or low. Many Kentucky nonprofits could save as much as 30 percent on their unemployment costs by opting out of the unemployment insurance tax system – an advantage provided to them by the IRS. Doing so affords nonprofits unique avenues that allow them to strategically handle unemployment claims administration and unemployment insurance taxes in ways that for-profits can only dream about.
Contact us today for more information concerning your nonprofit unemployment insurance tax advantages.