Home Budget & Tax News Reduced Unemployment Tax Rate Will Continue in North Carolina

Reduced Unemployment Tax Rate Will Continue in North Carolina

By Nyamekye Daniel

(The Center Square) – Legislation that offers unemployment tax relief to business owners is now law in North Carolina.

Gov. Roy Cooper signed Senate Bill 114 into law to prevent the base unemployment insurance tax rate for experienced employers from increasing Thursday.

The bill unanimously cleared the General Assembly on Tuesday before Cooper signed it. The Senate approved final changes to measure, 48-0, after it cleared the House, 119-0, on Tuesday afternoon.

Each employer’s unemployment insurance premium includes their base rate and experience rate. An experience rate is based on the employer’s risk level, mainly evaluated on how many workers have received unemployment benefits.

Under North Carolina law, state unemployment tax has three possible base rates, which adjust each year based on the state’s unemployment trust’s solvency. The lowest base rate was applied in 2019, and the middle base rate was supposed to be activated Thursday. SB 114 would put the adjustment on hold for the rest of the tax year, keeping the base contribution at 1.9%.

The legislation was recommended by the Joint Legislative Oversight Committee on Unemployment Insurance after consulting with the North Carolina Department of Commerce’s Division of Employment Security (DES). It also includes several technical changes to COVID-19-related unemployment benefits and extends waivers of some of the temporary COVID-19 unemployment rules until Dec. 31.

SB 114 allows “back-to-back” extended benefit periods for COVID-19-related unemployment claims and regular unemployment claims until the end of the year. It eliminates the waiting period between extended benefits payments and regular state benefits payments. It ensures wages that may reduce unemployment benefits are earned within the same week as the benefit payment.

Unemployed workers who qualify for the federal Pandemic Emergency Unemployment Compensation program (PEUC) will receive the federal payment before the state payment in certain situations under the law. The DES said the provision allows the state to exhaust federal benefits first, protecting North Carolina’s $2 billion unemployment trust fund.

North Carolina’s unemployment rate in February was 5.7%, decreasing 0.2 points from January’s rate but 2.1 percentage points higher than the same time a year ago. After the onset of the COVID-19 pandemic in April 2020, the state’s unemployment rate skyrocketed to 13.3%. More than 1.4 million workers have filed for unemployment in the state since March 2020. As of Tuesday, DES has paid $10.9 billion in state and federal unemployment benefits.

SB 114 initially cleared the Senate unanimously March 10.


Originally published by The Center Square. Republished with permission.


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