March 1, 2021
Pennsylvania 2021 SUI tax rate factors and taxable wage base to remain the same; COVID-19 benefits are not charged to employer accounts despite information sent to employers
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:
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.
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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