$125 Million Growth in Maryland’s Unemployment Insurance Trust Fund Triggers Reductions in Taxes
ANNAPOLIS, MD – Governor Larry Hogan today announced that most Maryland businesses will see a significant reduction in unemployment insurance taxes, the lowest possible rates allowed under state law, beginning in the First Quarter of 2016. Maryland employers will now pay between $25.50 and $127.50 less per employee per year than what is paid by businesses under the current rate.
“Our administration is committed to making it easier for citizens and companies to do business in Maryland. Earlier this year, we eliminated 100 fees across state government, and we are streamlining processes in government agencies, cutting out bureaucracy and working to identify and eliminate unnecessary regulations that harm small businesses and employers,” said Governor Hogan. “Due to the strong growth of the Unemployment Insurance Trust Fund, we are pleased to be able to let business owners know that the cost of unemployment insurance in Maryland will be reduced. This is a real win for our business community and the state as a whole.”
Due to the fact that most Maryland employers pay the minimum tax rate, many companies will experience a 50 percent reduction in unemployment insurance from $51.00 to $25.50 per employee per year.
“The unemployment tax rate reduction is a sign of Maryland’s improving business climate that will allow employers the opportunity to thrive and create jobs as we work together to strengthen our economy,” said Secretary of the Department of Labor, Licensing and Regulation Kelly M. Schulz.
Since January 1, 2015, Maryland’s Unemployment Insurance Trust Fund has grown by more than $125 million to $983,656,790.26, as of September 30, 2015. Year-on-year, the trust fund balance has grown by almost $80 million.
This high balance triggers a key rate change for 2016, shifting all Maryland employers to “Table A,” or a range of unemployment insurance tax rates between 0.3 percent and 7.5 percent of the first $8,500 in wages paid to employees. For 2015, Table B was in effect with a range of tax rates of 0.6 percent to 9 percent of the first $8,500 in annual wages. The new employer’s rate in 2016 will be 2.6 percent. An exception is that the rate for new construction employers headquartered in another state will be 7.5 percent.
The Maryland Unemployment Insurance Program is financed by the Federal Unemployment Tax Act (FUTA) and is administered by the Maryland Department of Labor, Licensing and Regulation. As required by Maryland law, the Division of Unemployment Insurance does an annual “temperature check” on the Unemployment Insurance (UI) Trust Fund. This temperature check is made using the ending balance of the Trust Fund on September 30. The reconciled ending balance is compared to the taxable wage base for the preceding four quarters. That ratio determines the UI Rate Table for the ensuing calendar year.