Firms get the news: Payroll taxes go up to cover unemployment costs
State employment agency says new tax rates begin in January
Oregon employment officials will announce Monday morning the state’s unemployment numbers for October, but state employers are getting word this week that they’ll have to pay more in payroll taxes to keep the Unemployment Insurance Trust Fund in balance.
The state Employment Department began mailing notices Friday telling companies that the agency would adjust its payroll tax rate upward to an average of 2.76 percent of the first $32,100 paid to each employee.
New employers will see their payroll tax rate increase from 2.4 percent to 3.1 percent.
Right now the tax rate under Schedule 3 is between 0.9 percent and 5.4 percent of the first $31,300 paid to employees.
State officials said the change was required to keep the unemployment trust fund stable. Since the beginning of the year, the state has paid $2.2 billion in benefits from the fund. An average of about $50 million a week has been paid to 175,000 unemployed Oregonians, the Employment Department reported Friday.
Money for the fund comes from state and federal trust funds replenished by employer payroll taxes. The increased payroll taxes go into effect in January.
Depending on the need for funds, Oregon’s payroll tax rate shifts among six tax schedules. The state is moving early next year to Schedule 6, which means the payroll tax rates will range from 1.8 percent of the first $32,100 paid to each employee, to 5.4 percent.
The specific rate each employer pays under the new schedule depends on how much they have used the unemployment insurance system. Some employers with higher unemployment claims will pay at the higher rate.
Oregon is one of the few states in the nation with a solvent unemployment insurance fund. About 40 states funds are expected to run out of money by 2012, according to the state Employment Department.
Oregon’s unemployment rate in September dropped slightly to 11.5 percent from August’s 12 percent, the state reported in mid-October. At that time, 211,529 Oregonians were unemployed, about double the number from a year earlier.
Each week, unemployed Oregonians can get a minimum of $115 and a maximum of $493 in unemployment insurance. The average weekly amount is $311.76, according to the state agency.