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August 28, 2020

Michigan SUI taxable wage base expected to increase for 2021 due to COVID-19's depletion of UI trust fund

Michigan employers should expect to see an increase in the state unemployment insurance (SUI) taxable wage base from the $9,000 that has been in effect for the past several years to the $9,500 currently only required to be used by delinquent employers. Reportedly, Michigan's unemployment insurance (UI) trust fund balance fell below $2.5 billion on June 30, 2020, the balance required for the $9,000 wage base to be in effect. (Michigan Chamber of Commerce article, July 2020.)

Legislation enacted in late 2015 (SB 500) revised Michigan's UI law by setting the SUI taxable wage base to $9,000 for any calendar year that the SUI trust fund balance exceeds $2.5 billion as of the previous June 30 and the Michigan Unemployment Insurance Agency (UIA) projects at the beginning of the next year that the trust fund balance will continue to exceed $2.5 billion for the first and second quarters.? (EY Payroll Newsflash Vol. 17, #010, 1-12-2016.)?

2020 SUI tax rates decreased significantly

As we reported, employers are enjoying a SUI tax rate reduction for 2020 thanks to the early payoff of the bonds used by the UIA to repay their federal SUI loan taken out during the previous economic downturn. As a result, the Obligation Assessment (OA) added to employer SUI tax rates since 2012 was eliminated for 2020.??(Tax Alert 2020-0131.)

The OA was used from 2012–2019 to repay the $3.2 billion in bonds issued to retire the federal UI loan in December 2011 and return the net FUTA rate to 0.6%. It was originally expected that it would take up to 10 years to repay the bonds. A chart is available from the UIA that shows the savings per rate per employee.?

According to the federal Treasury Direct website, Michigan has not yet requested the option, if needed, to receive federal unemployment insurance (UI) Title XII advances (UI loans).

For more information on the Michigan UIA's response to COVID-19, see the agency'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 (


EY Payroll News Flash