In an effort to improve Connecticut’s Unemployment Insurance (UI) Trust Fund solvency following the COVID-19 pandemic, the legislature passed Public Acts 21-200 and 22-67, to implement reforms that were achieved through a collaborative effort of business and labor. Changes to the tax and benefit system, plus the inclusion of indexing various tax and benefits measures, will promote long term UI Trust Fund solvency; reduce employer costs; build in cost predictability to support employer fiscal planning; and stabilize UI benefit payments to unemployed workers.
THE FOLLOWING UI TAX CHANGES ARE EFFECTIVE JANUARY 1, 2024:
· The Taxable Wage Base (TWB) increases from $15,000 to $25,000 and is subsequently indexed annually due to inflation.
· To minimize the short-term impact of the TWB increase, charged rates in calendar years 2024, 2025, 2026, and 2027 will be reduced by factors of 1.471, 1.269, 1.125, and 1.053 respectively.
· The state’s minimum charged rate is reduced from 0.5% to 0.1%.
· The state’s maximum charged rate increases from 5.4% to 10.0%.
· The state’s maximum fund solvency tax rate is reduced from 1.4% to 1.0%. The maximum fund solvency tax rate is further reduced to 0.5% during years in which an economic recession has been declared.
Benefit ratio adjustment: If the average benefit ratio of all employers within a sector of the North American Industry Classification System (NAICS) increases by 1% or more over the average benefit ratio of that sector from the previous year, then the benefit ratio of each employer within such sector shall have their individual benefit ratio reduced by one-half of the increase.
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