Chamber Supports Legislation to Ensure Consistency in UI Tax Bills

September 21, 2015

Last week, the Michigan Chamber supported legislation considered by the Senate Economic Development Committee to make quarterly unemployment insurance (UI) tax bills more predictable for employers.

Under legislation championed by the Michigan Chamber in 2011, a UI tax reduction is expected beginning with 3rd quarter wage reports (filed by Oct 25). This means non-delinquent employers will pay UI taxes based on a taxable wage base (TWB) of $9,000. The 2011 legislation specified that when the UI Trust Fund (the fund that pays UI claimants) balance reaches $2.5 billion, and is expected to remain there for two quarters, the TWB would automatically reduce from $9,500 to $9,000. 

Senate Bill 500, sponsored by Sen. Horn (R-Frankenmuth), makes a technical fix to the 2011 law. The legislation would require the Unemployment Insurance Agency (UIA) to determine by June 30 of each year whether the Trust Fund had a balance of at least $2.5 billion and to set the TWB at $9,000 or $9,500 based on this determination and other factors. This change means employers will no longer see a quarterly fluctuation in their UI rates, allowing employers to better budget for their UI obligations. In practice, SB 500 ensures that MI employers will stay at a $9,000 TWB through the end of 2016, if not beyond. 

The TWB is the annual amount of wages paid by an employer to an employee that are subject to state UI taxes. To determine an employer’s yearly unemployment tax, the wages of each covered worker (up to the TWB) is multiplied by the employer’s annual (experience rated) tax rate. 

The legislation is expected to be reported to the full Senate within the next few weeks.  

For more information, please contact Wendy Block, Director of Health Policy & Human Resources, at (517) 371-7678 or