December 19, 2022
A preliminary look at the 2023 SUI taxable wage bases as of December 19, 2022
SUI trust funds are largely financed by employer contributions (in Alaska, New Jersey and Pennsylvania employees also make contributions). States are required to maintain a SUI taxable wage base of no less than the limit set under the Federal Unemployment Tax Act (FUTA). The 2023 FUTA wage limit of $7,000 has remained unchanged since 1983, despite increases in the federal minimum wage and annual cost-of-living adjustments over the last 40 years.
Some states are conservative in their approach to maintaining adequate SUI trust fund reserves. Consequently, the SUI wage base is flexible in those states, meaning, it is indexed to the average wage or varies based on the trust fund balance. According to the U.S. Department of Labor (US DOL), 25 jurisdictions had a flexible wage base in 2021 (the US DOL expects the 2022 information will be available by the end of December 2022). (U.S. Department of Labor, Comparison of State Unemployment Laws.)
A preliminary look at the 2023 state unemployment taxable wage bases
Following is a preliminary list of the 2023 SUI taxable wage bases (as compared to 2022) and employee SUI withholding rates, if applicable.
* Law sets the taxable wage base; legislation would be necessary to change.
** See applicable footnote below.
EST: Estimated 2023 wage base
TBD: 2023 wage base was not available as of the time of this printing
Effective January 1, 2023, legislation (SB 1828/Chapter 412) increased the SUI taxable wage base to $8,000, up from $7,000. This increase is intended to fund the rise in the maximum weekly unemployment insurance (UI) benefit amount, which effective July 1, 2022, increased to $320, up from $240.
For calendar years after 2019, the wage base is determined each year based on the average seasonal unadjusted insured unemployment rate and disbursements from and the balance of the state’s UI trust fund. The wage base can range from $7,000 to $12,000. (Ark. Code Ann. § 11-10-215.)
As a result of 2021 legislation (HB 1409/Act 368), the SUI taxable wage base for calendar year 2022 remained at $10,000, the same as it was in 2021. Absent this legislation, and due to the continuing effect on the state’s UI trust fund of the COVID-19 pandemic, the SUI wage base could have increased to $11,000 or $12,000 for 2022.
Legislation in 2020 (SB 20-207) held the SUI taxable wage base at $13,600 for calendar year 2021 with incremental increases each year thereafter until it reaches $30,600 in 2026. The 2022 SUI taxable wage base was $17,000, then $20,400 in 2023, $23,800 in 2024, and $27,200 in 2025. After 2026, the taxable wage base will be adjusted by changes in the annual average weekly wage.
A law passed in 2021 (HB 6633/Public Act 21-200) increases the SUI taxable wage base for calendar year 2024 to $25,000, up from the current $15,000. Beginning with calendar year 2025, the taxable wage base will be indexed each year for inflation.
In 2013, legislation (HB 168) increased the SUI taxable wage base to a minimum of $10,500 and a maximum of $18,500 by linking the wage limit to the balance of the state's unemployment trust fund. The higher the trust fund balance, the lower the taxable wage base. In 2019, legislation (HB 198) froze the taxable wage base at $16,500 for 2020 (under the bill language from July 1, 2019 to October 29, 2020) so that the Division of Unemployment Insurance and the Unemployment Compensation Advisory Council could determine whether the formula used to calculate the annual figure should be revised.
In 2021, HB 413/Chapter 177 reduced the 2021 SUI taxes by freezing the rate schedule to Schedule A, the lowest rate schedule provided for by law, and the 2021 taxable wage base to $10,800, the same rate schedule and taxable wage base that applied in 2020. Revised tax rate notices were issued in April 2021. HB 413 would also have frozen the rate schedule to Schedule A and taxable wage base to $10,800 for calendar year 2022; however, Governor Andy Beshear line-item vetoed the provisions that extended the UI tax relief to calendar year 2022, saying that the state should wait and see until 2022 because "the Commonwealth's financial situation is fluid." The legislature did not override the governor's veto. The taxable wage base is expected to continue to increase by $300 each calendar year until it reaches $12,000.
Legislation enacted in 2022 (HB 192/Act 116) freezes the 2023 Louisiana SUI taxable wage base to $7,700, as has been the case for calendar years 2021-2022. Legislation passed in 2021 (SB 89/Act 91) requires that the taxable wage base remains at $7,700 for 2022. In 2020, legislation (SB 55/Act 40) provided that the SUI taxable wage base remained at $7,700 for 2021.
The 2021 SUI taxable wage base increased to $9,500 for all employers, up from the $9,000 that had been in effect for the past several years for non-delinquent employers ($9,500 was assigned to delinquent employers). This was because Michigan's UI trust fund balance fell below $2.5 billion on June 30, 2020. The UI agency announced that the taxable wage base of $9,500 will continue for 2022.
Legislation from 2019 (LB 428) increases the SUI taxable wage base to $24,000 for employers assigned the maximum rate. This change was effective for calendar year 2020. The taxable wage base remains $9,000 for all other employers.
Employee contribution rate includes the Workforce Development/Supplemental Workforce Funds surcharge.
The taxable wage base will continue to increase as follows: 2022 — $12,000; 2023 — $12,300; 2024 — $12,500; 2025 — $12,800; 2026 — $13,000; for each year thereafter, computed as 16% of the state's average annual wage.
Legislation enacted in 2016 (SB 235) increased the SUI taxable wage base to $9,500 for calendar years 2018 and 2019. The taxable wage base reverted to $9,000 effective January 1, 2020 and will remain at that amount unless changed by future legislation.
Legislation from 2017 grants the territory's Secretary of Labor the discretion to increase the taxable wage base to as much as $10,500 if deemed necessary.
Negative-balanced employers assigned the maximum tax rate will have a taxable wage base that is $1,500 higher than other employers (e.g., for 2023, $28,200 versus $29,700 for negative-balanced employers).
Under Tennessee UI law, if the UI trust fund balance on December 31 of any year is less than $900 million, the taxable wage base is $9,000. If the trust fund balance is above $900 million, but less than $1 billion on December 31, the taxable wage base is $8,000. If the trust fund balance exceeds $1 billion on December 31, the taxable wage base is $7,000. If the balance remains above $1 billion as of December 31, 2022, the 2023 taxable wage base will remain $7,000.
Under current law, the wage base is lowered to $9,000 if the unemployment trust fund is at least $220 million on February 15 of any year. (W. Va. Code § 21A-1A-28; Code of State Rules § 83-1-7 .1; Workforce West Virginia email notice to taxable employers, 2-17-2022.)
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
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