Texas to slightly raise Unemployment Insurance Tax

from the alpineavalanche

Unemployment tax rate set for 2009

Special to the Avalanche

AUSTIN — Texas employers will pay a minimum unemployment insurance (UI) tax rate of 0.26 percent this year, up from a 25-year low in 2008. It is the first increase in the employer UI tax rate since 2004, according to the Texas Workforce Commission.

The 2009 rate also reinstates the replenishment tax component, which TWC temporarily suspended in 2008 because of strong economic conditions in Texas. The rate increase reflects a higher UI benefit outlay in recent months. The taxes replenish the Unemployment Compensation Trust Fund, which provides unemployment insurance for Texas workers who lose their jobs through no fault of their own.

An employer paying the minimum rate will spend $23.40 in tax per employee in 2009.

Texas employer UI taxes at the minimum rate remain lower than many other states. For example, Ohio employers pay a $63 minimum per employee, Arkansas employers pay $90, and California employers pay $105.

Components of the 2009 tax rate are:

General tax rate — Based on claims against an employer’s account. If TWC has paid benefits to former employees who were laid off or separated through no fault of their own in the past three years, those employers will pay a general tax.

Replenishment tax rate — Charged to all employers to cover unemployment claims not charged to a specific employer. This tax tends to rise following economic slowdowns when claims increase and businesses close.

Employment training assessment — Charged to all employers eligible for a computed tax rate to finance the Skills Development Fund and the Texas Enterprise Fund. The employment training assessment calculation is a separate line item on the Employer’s Quarterly Tax Report.