Do you know why your state unemployment taxes go up and down?

Courtesy – Personnel Planners

Unemployment taxes are a bit like worker’s comp taxes.  If you have no worker’s comp claims, you pay not so very much in worker’s comp insurance.  Same is true for unemployment taxes. If fewer people collect less in benefits from your company, you get lower taxes.  In 2015, the lowest rate is .55% on the first $12,960 of employees’ wages.  But if you have lots of paid unemployment benefits (relative to the size of your taxable payroll), you could be at the highest rate:  8.15%.

So your cost per employee could vary from about $71 per employee to $1056 per employee.

Each year, your company gets a new tax rate, the state uses a three year moving average to calculate your unemployment tax rate.  So if in a three year period you have no awarded unemployment claims, you could be taxed at the lowest rate and if you have lots of paid claims relative to the size of your taxable payroll, you really get to pay!

The average awarded claim, we guess, costs somewhere between four and seven thousand dollars in increased costs to your business.

If you would like to explore the Chamber’s program for controlling these costs, please go to www.unemploymentclaims.com/ilchamber and take a step toward lowering your U.I. taxes!

The opinions expressed in this article are solely those of the author and do not necessarily represent the official policy or position or the Illinois Chamber of Commerce.