The Oregon Employment Department has announced that it will be reducing unemployment tax rates for most Oregon employers in 2016. This is the third year in a row that Oregon unemployment insurance taxes have dropped for employers.
Unemployment insurance taxes in Oregon will still be based on the first $35,700 in wages per employee. That is the third highest taxable wage base in the nation (following Washington and Hawaii). 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.
Oregon law requires the Employment Department use a statutory formula to determine payroll tax rates for the upcoming year. Those taxes are pooled in the state’s unemployment insurance trust fund and are used to pay unemployment benefits to qualified workers.
In 2016, employers that pay into the unemployment insurance tax system (municipalities and 501(c)(3)s are exempt if they choose to be) will move from Schedule 5 to Schedule 4. That change in formula will save the average Oregon employer $69 annually per employee. The specific rate each employer pays depends on their past unemployment claims history.
In 2010, the trust fund had a balance of $700,000 but has now risen to $2.7 billion in 2015. The Oregon Employment Department believes its self-balancing approach has resulted in one of the strongest trust funds in the country.
501(c)(3) organizations do not have to pay their state unemployment insurance taxes. Many Oregon nonprofits could save even more money by opting out of the unemployment insurance tax system. 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.
501(c) Agencies Trust recently produced a webinar for Oregon nonprofit employers to explain their options. You can watch that presentation on-demand here.