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Employer 2016 Unemployment Contribution Schedule To Drop to Lowest Rate Since 2009

October 30, 2015

The Maine Department of Labor has released the 2016 Unemployment Insurance Tax Rate Schedule. Rates will drop to the Schedule B level, the lowest rate since 2009. This drop represents an approximate 21 percent decrease in unemployment taxes paid per employee.

“Maine’s unemployment tax rates are back to pre-recessionary levels,” announced Governor Paul R. LePage. “As a result of job growth and significant reductions in the number of people receiving unemployment benefits, the tax rate for employers will drop two schedules. Maine’s employers will save approximately $30 million in 2016 while keeping the unemployment trust fund stable and solvent.”

“The new rates represent a return to pre-recessionary contribution schedules,” noted Commissioner of Labor Jeanne Paquette. For the seven years prior to the recession, unemployment tax rates fluctuated between Schedules A and B, jumping from Schedule A to E in 2010, then rising to F in 2011 where they stayed through 2013. The rate dropped to D in 2014 and stayed there in 2015.

“This will give our employers more money to reinvest in their workers and growing their business, benefiting our workforce and economy,” Commissioner Paquette added.

Maine’s job situation stabilized in 2011 and has sustained modest growth. This has had the dual effect of reducing the number of people receiving unemployment while improving the overall health of the unemployment trust fund.

Employers pay unemployment taxes on up to the first $12,000 in wages paid to each employee. Each business’ rate is based upon the business’ unemployment insurance experience, taxable wages and past contributions in relation to those of other businesses. The 2016 minimum rate will be 0.57 percent per $1,000 paid an employee, the maximum rate is 5.40 percent and the average rate, which is also the new employer rate, per $1,000 paid per employee will be 2.04 percent.

To put this in real dollars, employers paying the minimum rate will see an annual decrease of $20.40 in taxes per employee paid at least $12,000 in wages, employers paying the average rate will see a decrease of $67.20 per employee, and employers paying the maximum rate will see a decrease of $175.20 per employee.

State unemployment taxes are paid by employers into the Maine Unemployment Trust Fund and are used solely to pay benefits to people who lose their jobs through no fault of their own. No funds are taken out of Maine workers’ checks to support this system.

Administration of the unemployment insurance system is not supported by employer-paid state unemployment taxes. The cost of the program’s administration is almost entirely funded through federal grants to the state, supported by the federal unemployment tax paid by employers.

The Department of Labor administers Maine’s unemployment insurance system. Employers should receive their individual 2016 rate notices in mid-to-late December. Employers with questions about their 2015 or 2016 unemployment contributions should visit the department’s webpage on unemployment taxes at http://www.maine.gov/labor/unemployment/tax.html or call (207) 621-5120.