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The calendar year 2021 employer state unemployment insurance (SUI) experience tax rates continue to range from 1.2905% to 9.9333%. The new employer rate remains at 3.6890% for non-construction employers and 10.2238% for construction employers. (Pennsylvania Department of Labor & Industry, Office of Unemployment Compensation website.)

Pennsylvania employers with a negative reserve ratio of greater than 20% as of the computation date may elect to have their negative balance reduced to negative 20% of the average annual taxable payroll. Election must be made between January 1 and April 30 of the rate year. The employer is assigned the maximum experience-based SUI rate for the current and next two years from the date of election. Care should be taken in making this election as it is irrevocable after 10 days.

The SUI taxable wage base continues at $10,000 for 2021.

The 2021 employee SUI withholding rate remains at 0.06% on total wages.

Mailing of 2021 rate notices

The Department mails SUI rate notices, Form UC-657, on or before December 31 of each year. Employers can access their rate notice information in their UCMS employer portal.

2021 SUI tax rates

Based on the current level of the Pennsylvania SUI trust fund and economic forecasts for the coming year, the following solvency measures are in effect for calendar year 2020:

• 5.4% (.054) surcharge on employer contributions. The surcharge adjustment (a component of the SUI tax rate) is computed by multiplying the employer's 2021 basic rate by the 5.4% surcharge. The surcharge adjustment is factored into the total 2021 contribution rate.
• 0.75% (.0075) state adjustment factor. The state adjustment factor acts as an assessment on all employers and uniformly levies the common benefit costs that are paid out of the Pennsylvania Unemployment Compensation (UC) Fund, but that are not charged to any specific employer account. The state adjustment factor is uniformly applied to all experience-rated employers.
• 0.5% (.005) employer additional contribution tax. The additional contribution tax is added on to the employer's assigned tax rate. This tax is not subject to the surcharge adjustment and is not applicable to non-delinquent newly liable and reimbursable employers.
• 1.10% (.011) interest tax factor removed for 2020—2021. This additional contribution tax was added on to the employer's assigned tax rate for several years and was discontinued as of calendar year 2020. The monies collected were used by the department to pay the principal and interest due on the bonds sold to repay the federal UI loan.
• 0.06% (.0006) tax on employee wages. The employee withholding SUI tax is submitted with each Form UC-2/2A Quarterly Report. Employee withholding is not limited to the $10,000 taxable wage base for employer contributions; it applies to the total wages paid in 2021 (resulting in 60 cents per $1,000 earned).
• New employer rate of 3.6890% (.036890). The newly liable non-construction employer rate continues at 3.6890% for 2021 (including the 5.4% surcharge only, because the 0.5% additional contribution tax does not apply to newly liable employer rates).
• New construction employer rate of 10.2238% (.102238). The newly liable construction employer rate continues at 10.2238% for 2021 (including the 5.4% surcharge only, because the 0.5% additional contribution tax does not apply to newly liable employer rates).
• Standard tax rates. Contributory employers that have a sporadic employment history (having filed "zero" returns during each quarter of the last four years ending on the computation date or been inactive for less than five years) are assigned a standard rate of 6.1916% for 2021 if positive balanced or 10.1968% if negative balanced.
• Additional 3.0% (.030) for delinquent employers. As in the past, if a delinquency exists on the account through the second quarter of 2020, 3.0% is added to the basic tax rate. An employer assigned the delinquency rate may have their rate recalculated to their normally assigned rate by (1) filing an appeal of the delinquency rate within 90 days from the mailing date of the rate notice, (2) filing any outstanding registration documents and (3) filing outstanding quarterly tax reports and paying the balance due in full or entering into a payment plan that is approved by the Department.

The delinquency rate assigned to delinquent employers is adjusted by the solvency measures applicable to the particular year. The delinquency rate is the sum of the basic rate (reserve ratio factor + benefit ratio factor + state adjustment factor) +3 percent (3%) + the solvency measures (surcharge adjustment + additional contributions).

Note that If an employer defaults on an approved payment plan, the delinquency rate will be retroactively reinstated.

• A 2.4% (.024) benefit reduction applies for 2021. With few exceptions, the weekly UI benefit amount for all claimants will again be reduced by 2.4% for calendar year 2021.

For an explanation of the 2021 SUI tax rate computation, go here. For a historical rate chart (2014—2021), go here.

COVID-19 UI benefits should not be charged to employer accounts, but Department has noticed discrepancies

On March 27, 2020, Governor Tom Wolf signed Act 9 of 2020 to temporarily amend the Pennsylvania Unemployment Compensation (UC) Law. Pursuant to these emergency provisions related to COVID-19, contributory employers and reimbursable employers who had paid the 2020 solvency fee received automatic relief from charges for employees whose UC claims were due to the COVID-19 outbreak or public health officials' efforts to contain and prevent the spread of COVID-19. Contributory employers and reimbursable employers who had paid the solvency fee for calendar year 2020 did not have to apply for relief from these COVID-19 related charges.

Note that the agency's website indicates that the Form UC-640 benefit charge statements mailed in late 2020 indicated that employers were being charged for all UI benefits, including those attributable to COVID-19. The Department states, however, that all UI benefit charges that are the result of a separation due to COVID-19 were retroactively credited to employer accounts. While the Department says that employers do not need to contact the agency or send proof that the charges are the result of a COVID-19 separation, employers should carefully review future Forms UC-640 to confirm their accounts were properly credited.

For more information on SUI taxes in Pennsylvania, see the Department's website or contact the UC Employer Contact Center at +1 866 403 6163.

Ernst & Young LLP insights

Pennsylvania began in September 2020 to borrow from the federal government to keep the state UI trust fund solvent so that UI benefits may continue to be paid. According to the federal U.S. Department of Labor website, as of February 24, 2021, Pennsylvania had a federal UI Title XII loan balance of $1,137,942,463.60.

If the state continues to have an outstanding loan balance as of November 10, 2022, a federal unemployment insurance (FUTA) credit reduction of 0.3% would go into effect in 2022, thereby increasing the amount of FUTA tax that Pennsylvania employers are required to pay.

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