Gov. Ricketts Announces Unemployment Insurance Tax Relief
Tax declines for sixth straight year.
LINCOLN – Today, Governor Pete Ricketts and Commissioner of Labor John H. Albin announced that Nebraska’s average unemployment insurance tax rate for employers will decline for the sixth straight year. The average tax rate for 2017 will be 0.75 percent, a decrease of 0.25 percentage points from 2016 and a decrease of 2.58 percentage points compared to 2011.
“Without the burden of high unemployment taxes, businesses can focus more of their resources toward creating job opportunities and helping to grow Nebraska’s economy,” said Governor Ricketts. “Our state continues to have one of the strongest and most highly-ranked unemployment insurance tax systems in the country.”
Under the statutory formula, the reduction in unemployment benefit payments in 2016 and the healthy balance in the Nebraska Unemployment Trust Fund will result in Nebraska employers paying an estimated $17.6 million less in taxes in 2017 than they paid in 2016.
“The tax rate is based in part on the amount of unemployment benefits paid and the amount paid declined from almost $93 million in fiscal year 2015 to just over $79 million in fiscal year 2016, including $72.6 million paid by taxable employers,” said Commissioner Albin. “The amount of benefits paid was almost $104.7 million less in 2016 than in 2011.”
Nebraska continues to enjoy favorable unemployment tax rankings in the Tax Foundation’s State Business Tax Climate Index. The Tax Foundation ranked Nebraska’s unemployment insurance taxes in the top ten in the nation for 2017 and best in the sub-index measuring how well states ensure not only that unemployment costs are shared by all employers, but also that high-turnover employers pay more. Nebraska was noted as having low minimum and maximum tax rates and a wage base at or near the federal level.
REEMPLOYMENT PROGRAM SUPPORTS TAX REDUCTIONS
At the news conference, Governor Ricketts announced that a dramatic decline in continued unemployment claims and benefits paid out led to the decrease in the unemployment insurance tax rate. He credited Nebraska’s first-in-the-nation reemployment program for supporting this latest decrease. In the first nine months of 2016, unemployment benefits paid out in Nebraska declined by 19.4 percent year-over-year compared to a decline of 0.2 percent nationally. During the same time period, continued unemployment claims fell by 23.9 percent in Nebraska versus a national decline of 5.2 percent.
“The declines in claims and benefits paid out have already resulted in $13.4 million in savings so far this calendar year,” said Governor Ricketts. “Thanks to our first-in-the-nation reemployment system, we’ve been able to help put thousands of Nebraskans back to work and support reductions in continued claims and the supporting tax.”
While total benefits and claims to date this calendar year decreased, the maximum weekly benefit amount increased from $380 to $392 a week.
Last year, the Governor and NDOL announced the transformation of Nebraska’s unemployment system into a reemployment program. The program is unique among state labor departments in that all jobseekers who receive unemployment benefits are required to enroll in an individualized reemployment plan to remain eligible for benefits unless they are only on temporary layoff from their regular employer.
ABOUT THE UNEMPLOYMENT INSURANCE TAX
Unemployment insurance benefits are paid from the Trust Fund to workers separated from covered employment who meet eligibility requirements. Nebraska’s average unemployment insurance tax rate is based on the revenue target for the Trust Fund, which is to pay benefits; the state’s total taxable wages; and the amount of unemployment benefits paid in the previous fiscal year.
Tax rate notices for 2017 were mailed to employers December 5 and tax rates are available online at dol.nebraska.gov/uiconnect. A listing of all unemployment tax categories and the corresponding rates is online at dol.nebraska.gov.