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July 23, 2020

New Hampshire SUI taxable wage base to significantly increase due to COVID-19, emergency power surcharge is added for first time since 2010

The New Hampshire Department of Employment Security announced that as a result of the state's decreased unemployment insurance (UI) trust fund balance due to COVID-19 UI benefits, employers will see an increase in their state unemployment insurance (SUI) tax rates for second- and third-quarter 2020

For second-quarter 2020, the fund balance reduction rate for positive-balanced and new employers decreased to 1.0% and negative-balanced employers saw an inverse rate surcharge of 0.5% added to their tax rate. These increases appeared on the employers' second-quarter 2020 SUI tax returns, due July 31, 2020.

For example, if a positive-balanced employer SUI tax rate for first-quarter 2020 was 1.2% (2.7% base rate — 1.5% fund balance reduction), its second-quarter 2020 SUI tax rate is 1.7% (2.7% base rate — 1.0% fund balance reduction). A negative-balanced employer that paid at 2.8% for first-quarter 2020 is paying at 3.3% for second-quarter 2020.

For third-quarter 2020, employers will see a further increase in their SUI tax rates as the fund balance reduction rate for positive-balanced employers and new employers is reduced to zero (0.0%), negative-balanced employers have an inverse rate surcharge of 1.5% added to their tax rates, and a 0.5% emergency power surcharge is added to all employer tax rates. These rate increases will be reflected on employers' third-quarter 2020 SUI tax returns, due October 31, 2020. Employers have not seen an emergency power surcharge added to their tax rates since 2010.

Also reflected on the third-quarter 2020 returns will be employers' fiscal year (FY) 2021 tax rates reflecting employer experience through fourth-quarter 2019. While these tax rates do not reflect the effect of COIVD-19 UI benefits on their experience, employers are seeing the effect of COVID-19 on the state's UI trust fund through decreased fund balance reductions and the addition of inverse and emergency power surcharges.

New tax-rate calculations should be issued in mid-August 2020

New Hampshire is one of four states (New Hampshire, New Jersey, Tennessee and Vermont) that assign SUI tax rates on a fiscal year, rather than a calendar year, basis. As a result, new tax-rate calculations take effect as of July 1, 2020 and are effective through June 30, 2021, though rates may fluctuate each quarter depending on the size of the SUI trust fund for the previous quarter.

Traditionally, New Hampshire issues new fiscal year SUI basic tax rates in August of the tax year.

Information will also be available online for employers that are registered for the Department's Webtax electronic reporting system.


For fourth-quarter 2018 through first-quarter 2020, positive-balanced and new employers saw a 1.5% fund balance reduction applied to their base SUI tax rates.Negative-balanced employers, which by law are not eligible for the fund balance reduction, also saw lower rates when the 0.5% inverse rate surcharge was removed from their SUI tax rates for fourth-quarter 2018 through first-quarter 2020. Before fourth-quarter 2018, the last time the trust fund balance was at or above the $300-million threshold, providing employers with the 1.5% UI tax reduction, was the third-quarter 2002.

The second-quarter 2020 decrease in the fund balance reduction is the result of the UI trust fund balance falling below $300 million as of the first-quarter 2020. The UI trust fund balance fell below $250 million for second-quarter 2020, resulting in the elimination of the fund balance reduction for third-quarter 2020 and the addition of the emergency power surcharge. Negative-balanced employers are further affected through the additional inverse rate surcharge.

As a result of the COVID-19 crisis, employers should be prepared for their SUI tax rates to continue to increase over the coming quarters, even though UI benefits for COVID-19 are not charged to their individual employer accounts and federal funds should be available to help bolster the state's UI trust fund.

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 SUI 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.

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 though third-quarter 2018. Prior to fourth-quarter 2014, a fund balance reduction had not been in effect since the fourth-quarter 2008.

Previous economic downturn caused SUI rates to increase

Due to the previous 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 the loan was repaid 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.

Inverse rate surcharge

A 1.5% inverse rate surcharge was added to negative-balanced employers' tax rates beginning first-quarter 2010, decreasing to 1.0% for the fourth-quarter 2014, to 0.5% for first-quarter 2015, increasing again to 1.0% for the second- and third-quarters 2015, and decreasing to 0.5% for the fourth-quarter 2015 through third-quarter 2018.

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


Contact Information
For additional information concerning this Alert, please contact:
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (
   • Debera Salam (
   • Kristie Lowery (
   • Peter Berard (


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