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June 30, 2021

Vermont legislation lessens impact of regular COVID-19 UI benefits on future employer SUI tax rates

Recently enacted legislation (SB 62/Act 51) will lessen the effect COVID-19 UI benefits will have on future employer state unemployment insurance (SUI) tax rates by extending the provision of not charging regular COVID-19 unemployment insurance (UI) benefits in computing employers' accounts and by disregarding these benefits in computing the SUI rate schedules that will apply.

Charging of regular UI benefits to employer SUI accounts

SB 62 provides that UI benefits from calendar year 2020 not be charged against employer accounts and not be used in the calculation of the fiscal year (FY) 2022 SUI tax rates (July 1, 2021 to June 30, 2022). The law further requires that calendar year 2021 UI benefits under certain COVID-19-related circumstances will not be used in calculating tax rates for FY 2023 and later.

To be eligible for relief of regular COVID-19 benefit charges during 2021, the law provides that employers be required to request relief of these charges based on procedures to be adopted and a request form to be released by the Vermont Department of Labor on or before July 1, 2021.

Employer SUI tax rates for FY 2022 and FY 2023

SB 62 requires that UI benefit charges for calendar year 2020 not be used in the computation of the "current fund ratio" and the "highest benefit cost rate," used to determine which of the five rate schedules provided for by law will be in effect for the next fiscal year.

The fiscal note for SB 62 states it is expected that Rate Schedule III, with rates ranging from 0.8% to 6.5%, will be in effect for FY 2022, and Rate Schedule IV, with rates ranging from 1.1% to 7.7%, for FY 2023.

The Department's 2020 trust fund report, released on January 31, 2021, estimated that without the legislative changes, Rate Schedule V, with rates ranging from 1.3% to 8.4%, would have been in effect beginning FY 2022 (through FY 2024) and the taxable wage base would have increased to $14,600 for calendar year 2022.

For fiscal year (FY) 2021 (July 1, 2020 — June 30, 2021) the lowest rate Schedule I applied with SUI tax rates ranging from 0.4% to 5.4%, down from FY 2020's Rate Schedule III range of 0.8% to 6.5%. Because Rate Schedule I was in effect, the calendar year 2021 SUI taxable wage base is $14,100, down from $16,100 for calendar year 2020.

The new employer rate continues at 1%; however, out-of-state (foreign) corporation classified under the North American Industry Classification System (NAICS) as 236 Construction Building, 237 Heavy/Civil Engineering or 238, Specialty Trades foreign construction corporation, will be assigned a "New Employer" rate based on the industry average of all other similarly classified businesses during the past calendar year.

Work search requirements reinstated for UI benefit claimants

Effective May 9, 2021, recent-issued Addendum 15 to Executive Order 01-20 reinstated the requirement that all workers seeking UI benefits, including those related to COVID-19, actively search for work, and be able and available to accept suitable job offers.

UI claimants are required to return to work if called back by their employer. Refusal to return to work may result in the termination of UI benefit eligibility. Employers are required to report to the Department an employee's refusal to return to work by completing an online form. (Vermont Department of Labor website.)

Supplemental UI benefit payment

SB 62 adds a $25 supplemental weekly UI benefit for every claimant, beginning 30 days after the termination date for federal Pandemic Unemployment Compensation (currently September 6, 2021). The provision sunsets after $100 million has been expended.

For more information on Vermont SUI taxes, contact the Department at +1 802 828 4344 or visit its website. For more information on the Department's response to COVID-19, go here.

Ernst & Young LLP insights

Vermont is one of four states (New Hampshire, New Jersey, Tennessee, and Vermont) that assign SUI tax rates on a fiscal year basis, rather than a calendar year basis; however, the taxable wage base for these states is assigned on a calendar year basis.

According to the federal Treasury Direct website, as of June 30, 2021, Vermont has not yet requested the option, if needed, to receive federal unemployment insurance (UI) Title XII advances (UI loans).


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


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