Next year, employers in Ohio will enjoy a 50 percent reduction in their per employee unemployment insurance taxes. Currently, Ohio employers pay $168 per employee in unemployment insurance taxes. In 2017, that tax per employee will drop to $87.
The relief comes in the form of House Bill (HB) 390. That legislation, passed this year, enabled the state to more quickly repay the money it had borrowed from the federal government to meet its unemployment benefits liabilities during the Great Recession. Had Ohio not moved to repay this debt, employers would have seen higher unemployment insurance tax rates in 2017.
HB 390 caused the state to repay a large portion of its unemployment compensation debt to the federal government by November 10 of this year. Had that deadline not been met, additional federal penalties on Ohio employers would have increased the federal tax per employee from $147 in 2016 to $168 in 2017.
At the height of the recession, Ohio owed the federal government more than $3 billion. Currently, the state owes approximately $240 million.
Nonprofits have options
The above applies to all Ohio employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes – high or low. Many Ohio 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.