Kentucky employers recently received notice of lower unemployment insurance taxes, thanks to legislation championed by the Kentucky Chamber of Commerce.
Last week, the Kentucky Labor Cabinet notified employers that they would soon receive an “amended contribution rate notice” for their quarterly unemployment insurance tax contributions. Due to House Bill 144, sponsored by Representative Russell Webber and passed by the General Assembly last month, employers’ UI tax rates will be based on Schedule A instead of Schedule C. The “schedule” is a key factor used in determining employers’ UI tax rates.
Schedule A is the second most favorable schedule and was in place prior to the start of the pandemic. The rate schedules are tied to the health of the UI Trust Fund, which was depleted in 2020. This caused the rate schedule to fall to Schedule E in 2021 and Schedule C in 2022. Legislation sponsored by Representative Webber and championed by the Chamber in the 2021 and 2022 legislative sessions, however, froze the rate schedule at Schedule A and froze the taxable wage base.
House Bill 144 will save employers an estimated $75 per covered employee on average, for a total savings of approximately $130 million in 2022.
“Dollars that employers save on their unemployment insurance taxes are funds they can reinvest in their businesses, employees, and communities, which is a key part of how we grow Kentucky’s economy,” said the Chamber’s Senior Vice President of Public Affairs Kate Shanks. “The business community greatly appreciates Representative Webber’s hard work on this critical legislation.”
Legislation passed during the 2021 legislative session to freeze the rate schedule saved employers an estimated $100 per covered employee.
In addition to the tax savings for 2022 ensured by House Bill 144, this legislation also appropriated $242 million of federal relief funds to Kentucky’s unemployment insurance Trust Fund to replenish funds lost during the height of the pandemic. With this appropriation, employers can continue building the Trust Fund to prepare Kentucky’s economy for future recessions.
Governor Beshear signed House Bill 144 into law on March 24, 2022.
Click here for more Kentucky business news.