As the new year approaches, it’s time to start thinking about potential changes to make in 2020. You might be thinking about fitness, professional development, or travel goals, but there’s one area your company can’t afford to overlook: updated unemployment insurance tax rates.
FUTA vs. SUTA
When considering tax rates, it’s important to know the difference between the Federal Unemployment Tax Rate (FUTA) and State Unemployment Tax Rate (SUTA). At the federal level, the taxable wage base is set at $7,000 per employee. All employers must contribute that same rate into the UI fund.
In calculating SUTA, FUTA mandates that each state must have a wage base that at least equals what is set at the federal level. Each state uses its own formulas to calculate the individual rates. In some cases, it will tie into what is set by FUTA. Others will look at the average annual wage rate in their state to help set their percentage.
Why you need to pay attention
The changing rates will ultimately affect how much you pay into the fund in 2020. Failing to mark and plan for these changes can dig into your budget and leave you with additional expenses.
What to do now
At this point in the year, most states have released their 2020 rates, which means you can begin planning now. Go online to find your state’s rate to see if it’s been raised or lowered. You can also find out more information about how your state calculates its rate.
Work on lowering costs all year long
While you can’t predict changes in SUTA, you can work on lowering your own costs. The higher your turnover, or the more you pay for each claim, increases how much you contribute to the unemployment fund each year. Essentially, the standard you set is what the fund assumes it will need for the next year. If how much is used for UI is increased one year, the rate will go up the following year.
The best news? You don’t have to do it alone — partner with a third-party administrator like Unemployment Tracker to save you money now and later. Our full range of solutions are designed to meet your individual needs, whatever they are. Request a live demo and see how Unemployment Tracker can save you money.