The 2022 SUI taxable wage base has been increased to $38,000, up from $35,000 for 2021. (Minnesota Department of Employment and Economic Development (DEED), Unemployment Insurance Minnesota (UIMN) website.)

The Minnesota 2022 state unemployment insurance (SUI)l tax rates have increased substantially to range from 0.67% to 10.816%, up from a range of 0.208% to 9.36% for 2021.

The 2022 new employer SUI rates are based on the average industry rate, and range from 1.0% to 8.9%. New employers also pay the 0.1% Workforce Development Assessment surcharge.

The total SUI tax rates for calendar year 2022 include:

• The base SUI tax rate of 0.50% to 8.9%, up from 0.1% to 8.9% for 2021
• The 0.10% workforce development fee
• The 14% additional assessment that is in effect for 2022 because the state's UI trust fund balance as of March 31, 2021 fell below certain levels
• The federal interest assessment of 1.8%

The 0.5% base SUI tax rate and the additional assessment of 14% were last in effect in 2013. Prior to 2021, a federal interest assessment was last applied in 2012.

The base SUI tax rates and the 14% additional assessment are reported by the state to the federal government as part of the FUTA creditable SUI taxes for federal Form 940 purposes. The workforce development and federal interest assessment surcharges are not certified as SUI taxes and should not be included in creditable wages on the federal Form 940 worksheet.

Federal interest assessment surcharge

A federal interest assessment is added to employers' SUI tax rates for 2021—2022, used to pay the federal interest due as of September 30, 2021 and September 30, 2022 on the state's federal UI loan. The federal interest assessment rate is 1.8% for 2022, down from 4% for 2021.

2022 tax rate notices

The 2022 SUI tax rate notices were mailed to employers on December 15, 2021. Tax rate notices are also available on employers' Unemployment Insurance Minnesota (UIMN) online accounts.

Experience-rated employers may make a voluntary contribution to reduce their SUI tax rate by April 30 of the rate year, using the UIMN website.

See the UIMN's website for a multiyear history of the factors that compose the Minnesota SUI tax rates.

For more information on Minnesota unemployment taxes, see the UIMN website.

State lawmakers fail to enact legislation to lower employer SUI costs for 2022 and 2023

Minnesota lawmakers failed to pass SF2677, which would have transferred American Rescue Plan funds and general funds to the state's UI trust fund to repay outstanding federal UI loans and interest and replenish the state's UI trust fund to prevent future borrowing and increased employer costs.

SF2677 would also have put a lid on rising SUI tax rates as follows:

• Base tax rate. The base tax rate for calendar years 2022 and 2023 would have been set at 0.1% rather than be based on the unemployment insurance trust fund on March 31st of the previous year.
• Additional assessment. The additional assessment for calendar years 2022 and 2023 would have been set at 0% rather than be based on the unemployment insurance trust fund on March 31st of the previous year.
• Federal loan interest assessment. The federal loan interest assessment for calendar year 2022 would have been lowered to 0%, down from the current 1.8%.

As part of his 2022 Economic Opportunity Expansion Plan, Minnesota Gov. Tim Walz (DFL) proposed a one-time $2.73 billion investment to replenish the unemployment insurance trust fund.

The House Workforce and Business Development Finance and Policy and the Senate Jobs and Economic Growth Finance and Policy committees held hearings the week of February 7, 2022 on the use of American Rescue Plan stimulus funds to replenish the state's UI trust fund, freeze the 2022 base SUI tax rates to 2021 levels, and eliminate the additional and interest assessments.

See the National Federal of Independent Businesses (NFIB)'s January 21, 2022, letter to Governor Walsh and the state legislature on replenishing the UI trust fund and reducing employer tax rates. See also the Minnesota Chamber of Commerce United for Jobs' January 12, 2022 letter.

Ernst & Young LLP insights

Minnesota is one of 22 jurisdictions that in 2020 applied for, and were been approved to receive, federal UI loans because of the impact of COVID-19 UI benefits on the states' UI trust fund balances. As of March 27, 2022, the U.S. Department of Treasury shows that Minnesota had an outstanding federal UI loan balance of $1,385,817,512.51

Failure by the state to repay the federal loan balance by November 10, 2022, will result in a FUTA credit reduction of 0.3% for calendar year 2022.

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