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14 August 2024

Maryland takes steps to lower state unemployment insurance rates for some employers

The Maryland Department of Labor (Department) announced that it recomputed the state unemployment insurance (SUI) tax rates for 2024, resulting in a lower rate for some employers. Updated SUI rate notices were issued to all contributory employers in April 2024. The original 2024 SUI rate notices were issued on January 16, 2024.

The Department notes that this 2024 recalculation will not cause an increase in the SUI tax rate of any employer; all employers' rates are either unchanged or lowered from the rate notice originally issued in January 2024.

If employers already paid their SUI contributions for quarters 1 and 2 of 2024 and their 2024 SUI rate was lowered, they will receive a credit for the difference that can be applied to future SUI payments. Employers may also request a refund of the difference using the homepage of the Maryland SUI portal.

Background

The extraordinary unemployment claims paid in 2020 and 2021 from COVID-19 business closures dramatically reduced the SUI trust fund, which would have resulted in dramatic increases in the SUI tax rates. To prevent this adverse impact on businesses, Maryland's governor instructed the Department under Executive Order that 2021 SUI tax rates for contributory employers should be computed without regard to their pre-pandemic experience. Accordingly, for 2021 the SUI tax rate was computed as the lessor of (1) the employer's experience as of July 1, 2019, or (2) the actual experience as of July 1, 2020.

In 2022, SB 496/CH39 codified this special SUI tax calculation into law under MD Labor & Employment Section 8-606(d). Under Executive Order 21-06-15-01, this provision was effective through the second July 1 after Executive Order 20-12-10-01 expired on July 1, 2021 (i.e., July 1, 2023).

Per the Department's announcement, it reinterpreted MD Labor & Employment Section 8-606(d) as also being applicable to 2024 SUI tax rate calculations.

Ernst & Young LLP insights

Employers should confirm that they are using the correct 2024 SUI tax rate, and if not, review their SUI account status for overpayments for 2024 quarters 1 and 2.

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Contact Information

For additional information concerning this Alert, please contact:

Workforce Tax Services - Employment Tax Advisory Services

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor

Document ID: 2024-1548

 

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