A bill for an act relating to unemployment insurance taxes on employers.

2025-2026 Regular Session

SSB 1189 adjusts unemployment insurance tax rates for employers based on their benefit ratios, impacting financial obligations and payroll costs for businesses.

Subcommittee recommends passage.

#donations #insurance #laborandemployment #salariesandwages #taxation #unemployment #unemploymentcompensation

Bill Overview

Bill Number: SSB 1189

Title: A bill for an act relating to unemployment insurance taxes on employers.

Status: Subcommittee recommends passage.

Introduced: February 26, 2025

Classification: Proposed bill

Subject Areas: Donations, Insurance, Labor and Employment, Salaries and Wages, Taxation, Unemployment, Unemployment Compensation

Purpose and Intent

The primary purpose of SSB 1189 is to amend the existing framework for determining unemployment insurance tax rates for employers. The bill aims to adjust how employers are assigned contribution rates based on their benefit ratios, thereby impacting the financial obligations of employers in relation to unemployment insurance.

Key Provisions

Amendment to Contribution Rate Assignment:

The bill proposes changes to Section 96.7 of the Code 2025, specifically targeting the assignment of contribution rates for employers qualified for an experience rating.
Employers will be assigned a contribution rate that corresponds to their benefit ratio rank, which is determined by comparing all employers’ benefit ratios.
The ranking will categorize employers into nine separate ranks based on their benefit ratios, with the first six ranks containing approximately 4.29% of the total taxable wages and the last three ranks containing about 4.76%.

Benefit Ratio Calculation:

Employers will be ranked from lowest to highest benefit ratios based on their taxable wages paid in covered employment during the four completed calendar quarters preceding the computation date.
If an employer qualifies for multiple benefit ratio ranks, they will receive the rank associated with the lower contribution rate.
Employers with identical benefit ratios will be assigned to the same rank.

Impact

Who is Affected:

The bill primarily affects employers who are subject to unemployment insurance taxes. The changes may lead to variations in tax obligations based on the employer's benefit ratio, potentially impacting their financial planning and payroll costs.

Potential Outcomes:

Employers with lower benefit ratios may benefit from reduced contribution rates, while those with higher ratios may face increased rates.
The restructuring of contribution rates aims to create a more equitable system that reflects the actual unemployment claims made by employees of each employer.

Procedural Aspects

Legislative Actions:

February 26, 2025: The bill was introduced and referred to the Workforce committee.
March 3, 2025: The subcommittee recommended passage of the bill.
Upcoming Meeting: A subcommittee meeting is scheduled for March 3, 2025, at 12:30 PM in Room 217 Conference Room.

This summary provides an overview of SSB 1189, detailing its intent, key provisions, and potential impacts on employers regarding unemployment insurance taxes.

Bill