The Arizona 2022 state unemployment insurance (SUI) tax rates range from 0.08% to 20.93%, up from 0.08% to 20.6% for 2021. The 2022 new employer rate continues at 2.0%.

This minimal increase is due to the deposit of federal American Rescue Plan Act (ARPA) stimulus funds to the state's SUI trust fund. Governor Doug Ducey announced in 2021 that $759 million of ARPA funds were deposited, in addition to a previous deposit of $62 million.

The Arizona Department of Economic Security announced that in addition to the option to pay electronically using ACH Debit and Credit, employers will soon be allowed to make their quarterly SUI tax payments by phone using a credit or debit card. (UI employer newsletter, third quarter 2021.)

Mailing of 2022 rate notice

The Department mailed the 2022 SUI tax rate notices to employers on December 30, 2021. (Email response to inquiry.)

Employers may also obtain copies of their current and past SUI tax rate notices online through the Arizona Tax and Wage System (TWS) by logging in and selecting "Rate/Benefit Charge Notices" from the menu.

2022 taxable wage base remains at $7,000; will increase to $8,000 in 2023

The SUI taxable wage base continues at $7,000 for 2022.

Recent legislation (SB 1828/Chapter 412) increases Arizona's SUI taxable wage base and maximum weekly UI benefit amount.

Effective January 1, 2023, under Chapter 412 the Arizona SUI taxable wage base will increase slightly to $8,000, up from $7,000. This increase is intended to fund the increase to the maximum weekly UI benefit amount, which effective July 1, 2022, increases to $320, up from $240.

Two options to potentially reduce 2022 tax rates

Experience-rated employers can potentially reduce their 2022 SUI tax rates if they act by February 28, 2022.

Following are the two voluntary elections that can lower your SUI tax rate:

• Voluntary contributions. Experience-rated employers may make a voluntary contribution to reduce their assigned 2022 SUI tax rate. The voluntary payment increases the amount of the employer's reserve account and thereby may reduce the employer's state unemployment tax rate.
• Joint accounts. Joint accounts may only be formed in Arizona if the employing entities are commonly owned. By forming a joint account, the unemployment experience of two or more Arizona employers are combined to obtain a single SUI tax rate. The members of a joint account with favorable employment history can share their unemployment insurance reserves with other members of the joint account, effectuating an overall reduction in SUI taxes. In a large corporate organization, not all members need to be included in the joint account election. Instead, entities may be included in the common rate group based on the overall desired SUI tax rate results. Newly formed joint accounts must participate in the joint account for a minimum of two years.

The joint account election offers an above-the-line tax benefit that does not require a change in the corporate structure. Each entity continues to file separate SUI returns after the joint account is established.

Joint accounts and voluntary contributions may mitigate some of the anticipated tax increases due to the current economic conditions. Employers may combine a joint account election and voluntary contribution for an increased overall benefit.

To achieve the benefit of a voluntary contribution, the payment must be mailed (postmarked) to the Department by February 28, 2022. To achieve the benefit of a joint account election, an application must be mailed (postmarked) by February 28, 2022, to be applicable for the 2022 tax year.

Not all voluntary contributions and joint accounts are advantageous — a careful analysis of a company's specific unemployment facts is vital in determining whether to pursue the joint account election and/or a voluntary contribution.

For more information on Arizona SUI tax rates, see the Department's website.

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