The Washington Employment Security Department announced last week that the state is cutting unemployment insurance taxes for 2016. Tax rates in all 40 employer rate classes is set to decline to rates ranging from 0.10 to 5.7 percent. About 83 percent of employers will move into a lower rate class or stay the same in 2016.
This tax decrease means the average total tax paid per employee will decline by $48 to $277. The experience-rated portion of the 2016 unemployment tax will be based on benefit payouts from July 2011 through June 2015.
The results of cuts mean unemployment tax collections will decrease from $981 million in 2015 to an estimate $836 million in 2016.
The taxable wage base will remain $44,000. Employers pay unemployment taxes on the first $44,000 of each employee’s earnings. Washington’s taxable wage base is one of the highest in the nation.
The above applies to all Washington employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes. Many Washington nonprofits could save as much as 30 percent more 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.