Gov. Matt Bevin has announced that Kentucky is suspending the current unemployment insurance surcharge for contributing employers, effective immediately.
The state’s approximately 91,000 employers have been paying a surcharge assessment — currently 0.21 percent of their taxable wage base of $10,200 per employee — since January 1, 2014.
Cabinet officials estimate that this action will save Kentucky employers as much as $34.2 million annually.
During the Great Recession, the state’s UI trust fund balance fell far short of the amount required to pay benefits to unemployed individuals.
Beginning in Jan. 2009, Kentucky had to borrow from the federal government to pay unemployment benefits. Eventually, this borrowing reached nearly $1 billion. Legislation initiated in 2010, realigning both benefit levels and assessments on employers helped begin to restore the fund to solvency.
In April 2012, the Kentucky General Assembly passed legislation establishing a unemployment insurance surcharge to address approximately $55 million in unpaid interest to the federal government.
“Today is a great day for all employers in the Commonwealth,” said Gov. Bevin. “We have now retired the last of the unemployment debt and we are delighted to remove this additional tax burden from the backs of Kentucky’s job creators. This successful result was made possible by the collaborative efforts of the former administration, members of organized labor and the business community all working together to address this problem.”
Employers can find full details about UI at Kentucky’s Electronic Workplace for Employment Services.
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.