UI Taxable Wage Base Expected to Roll Back in October

August 10, 2015

As a result of the UI legislative package supported by the Michigan Chamber in 2011, the Unemployment Insurance (UI) Taxable Wage Base (TWB) is expected to roll back effective with the third quarter 2015 tax filings in October. This is good news for employers, as it will translate into a reduced UI tax liability.

The Unemployment Insurance Agency (UIA) reports Michigan’s TWB will be reduced to $9,000 from its current rate of $9,500. The reduction translates to approximately $16 million dollars less in taxes assessed over 2015, and $57 million less in taxes assessed over 2016, assuming the TWB stays at $9,000 throughout 2016.

The TWB is the annual amount of wages paid by an employer to an employee that are subject to state UI taxes. These contributions fund unemployment benefits for employees who lose their jobs through no fault of their own.

In 2011, measures were taken by Michigan’s legislature that aimed to ensure adequate funding for the state Unemployment Trust Fund and repay the nearly $3 billion the State of Michigan owed the federal government for its employer-financed UI system. The legislation specified that when the UI Trust Fund balance reaches $2.5 billion, and is expected to remain there for two consecutive quarters, the TWB would automatically decrease to $9,000. As of July 27, 2015, this condition was met.

The taxable wage base decrease will be effective with the third quarter 2015 filing of employers’ quarterly UI tax reports. The new rate of $9,000 will apply to all employers who pay unemployment taxes and who are not delinquent in the payment of unemployment contributions, penalties or interest.

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