The New Hampshire Department of Employment Security announced that the "fund balance reduction" will continue to be 1.0% for the second quarter 2016. Negative-balanced employers will continue to see a 0.5% inverse rate surcharge added to their SUI tax rates for second quarter 2016. As a result, employers will pay at the same state unemployment insurance (SUI) tax rates as for first quarter 2016 and fourth quarter 2015. (New Hampshire Department of Employment Security website, April 2016.)

The fund balance reduction reduces the tax rate at most to the minimum rate of 0.1%, therefore, employers originally assigned close to or at the minimum tax rate will not see the full 1.0% reduction. Employers registered with the Department's Webtax electronic reporting system can access the rate that will apply each quarter.

New employer rate

The new employer rate will continue to be 1.7% for second quarter 2016, including the additional 0.2% administrative contribution surcharge.

Taxable wage base

The taxable wage base continues at $14,000 for calendar year 2016. (New Hampshire Department of Employment Security website; RSA Section 282-A69.)

State law provides for reductions when the UI trust fund is strong

A 0.5% reduction in the assigned SUI tax rate is allowed if the state UI trust fund equals or exceeds $250 million throughout the preceding quarter; a 1.0% reduction is allowed if the trust fund equals or exceeds $275 million; and a 1.5% reduction is allowed if the trust fund equals or exceeds $300 million.

Fund balance reductions started up again fourth quarter 2014

As we reported previously, a fund balance reduction of 0.5% went into effect for the fourth quarter 2014, increased to 1.0% for first quarter 2015, decreased to 0.5% for the second and third quarters 2015 and increased to 1.0% for the fourth quarter 2015 through second quarter 2016. Prior to fourth quarter 2014, a fund balance reduction had not been in effect since the fourth quarter 2008.

Inverse rate surcharge

An inverse rate surcharge has been added to negative-balanced employers' tax rates since first quarter 2010 at 1.5%, decreasing to 1.0% for the fourth quarter 2014, to 0.5% for first quarter 2015, increasing back to 1.0% for the second and third quarters 2015, and decreasing to 0.5% for the fourth quarter 2015 through second quarter 2016.

Emergency surcharge

State UI law gives the commissioner of Employment Security the discretion to add or remove a surcharge based on the balance of the trust fund.

Due to the economic downturn, a 0.5% emergency surcharge was added to all employers' tax rates in 2009 to help increase the UI trust fund balance. A second 0.5% surcharge was added in 2010 as the effects of the economic downturn continued to impact the state. New Hampshire borrowed briefly from the federal government in March 2010 when the trust fund was temporarily insolvent, but repaid the loan before the end of the same year. The first 0.5% surcharge was removed beginning October 1, 2012 and the second surcharge was removed as of the fourth quarter 2013.

For more information on SUI taxes in New Hampshire, see the Department's website.

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