Reduced Unemployment Tax Rates & Replenishing the State Unemployment Fund

May 21, 2022Business, Business Tax

mn tRUST FUND REPLENISHMENT BILL

Employers may have noticed their Minnesota unemployment tax rate increased this year. Due to the high claims and benefit payouts during the pandemic, the state’s unemployment reserves were depleted and were in deficit. To continue paying benefits without interruption the state borrowed from the federal unemployment fund. Since the UI Fund was in deficit the base rate was raised to 0.50% of taxable wages as well as other increased assessments.

A new law authorized replenishing the state’s unemployment reserve and paying off the federal loan. The law also immediately removed the requirement for higher rates and assessments.

The new law reduces the:

  1. Base tax rate for 2022 from 0.50% to 0.10%. 
  2. Additional assessment for 2022 from 14.00% to 0.00%. 
  3. Special assessment (Federal Loan Interest Assessment) for 2022 from 1.80% to 0.00%

Because the law was passed only one business day before the filing deadline for the 1st Quarter Minnesota Unemployment returns, most of the state’s 130,000 employers had already filed and paid the balances due at the higher rates. The Minnesota Department of Employment and Economic Development has recalculated and adjusted the liability on the 1st Quarter returns and posted the credit to each employer’s account. Employers can now log into their accounts and request a refund if they desire, or simply leave the credit towards the 2nd Quarter taxes as prepaid.

Employers who utilize 3rd party payroll service providers will need to use or gain access to their own account on the Minnesota UI website to request a refund or see the credit applied. Nothing will be sent back to the payroll provider; the adjustment is on the business employer account only. Depending on the service used, you should check to see if your provider can or will request your refund for you.

Any refunds issued by the State of Minnesota will be by check, there is no electronic deposit option. Depending on the number of refund claims, it may take several weeks for the refund request to be processed.

If you have questions or comments, contact us at [email protected].

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