Unemployment tax increases projected to increase sharply in years ahead

A bright spot emerged last week from an examination of the Unemployment Insurance (UI) Trust Fund, but was counterbalanced with projections of much higher UI taxes in 2021 and beyond.

First, the good news. The latest Unemployment Insurance Trust Fund forecast shows that the state will not have to implement a solvency surtax on employers in 2021. This move would have cost businesses an extra $200 million. The state also will not need to take out federal loans to continue paying unemployment benefits, as had been expected.

Now the bad news. The UI tax will see a substantial increase in 2021, and that 0.2% solvency tax will likely need to be implemented in 2022 and 2023.

In short, employers will be paying a lot more in unemployment taxes in 2021 and beyond – just not quite as much as had been projected earlier this year.

“We are continuing to fight to keep rates reasonable and protect the fund,” said AWB Government Affairs Director Bob Battles, who sits on the Washington Unemployment Insurance Advisory Committee. “We’re working with ESD to make sure businesses’ interests are protected.”

Contact Battles with any questions.