Governor Signs Legislation to Provide Stability in UI Tax Bills

December 23, 2015

Chamber-supported legislation to make quarterly unemployment insurance (UI) tax bills more predictable for employers was signed by the Governor this week.

Under legislation passed in 2011, a UI tax reduction went into effect during the 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, down from $9,500. This is because the 2011 legislation specifies that when the UI Trust Fund (the fund that pays UI claimants) balance reaches $2.5 billion, the TWB is reduced. 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. 

Senate Bill 500, sponsored by Sen. Horn (R-Frankenmuth), now Public Act 240 of 2015, ensures that Michigan employers will stay at a $9,000 TWB through the end of 2016, if not beyond. This fix to the 2011 law requires the Unemployment Insurance Agency (UIA) to determine by June 30 of each year whether the Trust Fund has at least a $2.5 million balance and is expected to stay at that level for the succeeding calendar quarter. If it meets this threshold, the TWB will be $9,000 in the next calendar year. It if does not, the TWB will be $9,500. Without this change, employers would have seen a quarterly fluctuation in their UI rates, creating issues for budgeting and an administrative hassle.

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