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September 18, 2024
2024-1720

Nebraska law lowers SUI tax rates over next five years

Nebraska Governor Jim Pillen signed into law LB 1393 (2024), which lowers the state unemployment insurance (SUI) tax rates for 2025 through 2029 by lowering the average tax rate by 5%. The average tax rate is used in determining the individual SUI tax rates assigned to employers.

For 2024, Nebraska's SUI tax rates range from 0% to 5.4%, with individual employer SUI tax rates assigned across 20 rate categories. The average tax rate is assigned to category twelve within the state's 20-category rate schedule. The 2024 average tax rate is 0.48%. The other 19 tax rates, except Category 20, are calculated as a percent of the Category twelve rate determined by multiplying the Category twelve rate by an experience factor statutorily assigned to each category.

The Nebraska Department of Labor (Department) anticipates that this law change will result in a decrease in employer SUI contributions of 5%.

2024 SUI taxable wage base

The 2024 SUI taxable wage base is $9,000 for most employers. A higher wage base of $24,000 applies to maximum-rated employers (5.4% for 2024).

Nebraska is one of three states with more than one SUI taxable wage base. Rhode Island imposes a higher SUI taxable wage base to employers assigned the maximum SUI tax rate. Michigan may assign a higher taxable wage base to delinquent employers, depending on the status of the state's UI trust fund.

2024 SUI tax surcharge

A portion of the SUI tax rate for 2024 continues to go to the special state unemployment insurance tax (SUIT) fund. For 2024, the SUIT rate is 5% of the combined SUI tax rate. An employer will only receive credit for 95% of the contributions it pays for 2024 to its reserve account. The remaining 5% is diverted to the SUIT account. When completing the federal Form 940 for 2024, only 95% of the combined SUI tax rate is reported as SUI contributions.

Voluntary contributions

Experience-rated employers may make a voluntary contribution by January 10 of the rate year to potentially reduce their assigned combined SUI tax rate. A Voluntary Payment Notice is included within the annual SUI rate notice or is available online through the Department's NEworks system.

Employers with delinquent or missing UI reports

Any employer that has not submitted all quarterly SUI tax reports at the time SUI tax rates are calculated in November is assigned the maximum SUI tax rate of 5.4%. To receive a revised SUI tax rate, delinquent employers assigned the maximum rate may submit any delinquent or missing report by mail or via the online NEworks system on or before the December 31 falling prior to the rate year.

Ernst & Young LLP insights

Nebraska employers should consider updating SUI tax forecasting models to account for the potential of a lower SUI tax rate for tax years 2025 to 2029.

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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
 

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