On Thursday, October 4, 2018, the Vermont Department of Labor announced changes to the Unemployment Insurance (UI) program. Beginning January 1, 2019, employers will see a reduction in the taxable wage base amount that they currently pay on unemployment taxes by $2,000.
Nearly 22,600 employers remit state unemployment taxes to the Vermont Department of Labor on an annual basis. These taxes are deposited into the Unemployment Insurance Trust Fund and are used for the payment of unemployment insurance benefits to eligible claimants. The unemployment trust fund is “forward-funded,” meaning tax schedules are designed to raise more funds during periods of economic growth to ensure that there is adequate funding during economic recessions. The Department moved to Tax Rate Schedule III (3) in July of 2018, which triggered a reduction in unemployment insurance tax rates for employers starting July 1, 2018. The additional reduction in the taxable wage base announced today was also triggered by the move to the Tax Rate Schedule III and is effective January 1, 2019.
“Our unemployment trust fund has been steadily recovering from the impacts of the recession and is currently funded at an amount that is considered healthy,” said Labor Commissioner, Lindsay Kurrle. “The health of our trust fund is owed to the businesses who saw more than a 100% increase in their taxable wage base amounts since 2008. The confirmed changes represent tax relief for employers for the second year and an increase in benefits to claimants, both of which are encouraging for Vermont.”
For more information regarding tax schedules and rates, please visit the Vermont Department of Labor’s website: http://labor.vermont.gov/unemployment-insurance/employers/ui-tax-rates/
Nonprofits Have Other Options
The above applies to all Vermont employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes – high or low. Even with decreases in unemployment insurance taxes, many organizations are overpaying their unemployment liability. Recent analysis of 501(c)(3) employers reveals that 86% are overpaying into their state unemployment insurance program.
You can calculate your organization’s unemployment insurance overpayment at http://www.501c.com/overpayments/.
Contact us today for more information concerning your nonprofit unemployment insurance tax advantages.
