Nebraska announced this week that Nebraska’s average unemployment insurance tax rate for employers will decline for the sixth straight year. The average tax rate for 2017 will be 0.75 percent, a decrease of 0.25 percentage points from 2016 and a decrease of 2.58 percentage points compared to 2011.
“Without the burden of high unemployment taxes, businesses can focus more of their resources toward creating job opportunities and helping to grow Nebraska’s economy,” said Governor Pete Ricketts. “Our state continues to have one of the strongest and most highly-ranked unemployment insurance tax systems in the country.”
Under the state’s statutory formula, the reduction in unemployment benefit payments in 2016 and the healthy balance in the Nebraska Unemployment Trust Fund will result in Nebraska employers paying an estimated $17.6 million less in taxes in 2017 than they paid in 2016.
“The tax rate is based in part on the amount of unemployment benefits paid and the amount paid declined from almost $93 million in fiscal year 2015 to just over $79 million in fiscal year 2016, including $72.6 million paid by taxable employers,” said Commissioner of Labor John Albin. “The amount of benefits paid was almost $104.7 million less in 2016 than in 2011.”
Nebraska continues to enjoy favorable unemployment tax rankings in the Tax Foundation’s State Business Tax Climate Index. The Tax Foundation ranked Nebraska’s unemployment insurance taxes in the top ten in the nation for 2017 and best in the sub-index measuring how well states ensure not only that unemployment costs are shared by all employers, but also that high-turnover employers pay more. Nebraska was noted as having low minimum and maximum tax rates and a wage base at or near the federal level.
Nonprofits have options
The above applies to all Nebraska employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes. Many Nebraska nonprofits could save as much as 30 percent on their unemployment cost 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.