(The Center Square) – The tax rates Iowa employers pay for unemployment benefits in 2022 will remain at 2021 levels, Gov. Kim Reynolds announced this week.
This is the fifth consecutive year the tax rates will be in Table 7, the news release said. Table 7, one of eight tables the Iowa Workforce Development can select per calendar year under Iowa law, is the second lowest rate the law allows.
The table assesses unemployment tax rates through a formula based “primarily on the balance in Iowa’s unemployment insurance trust fund, unemployment benefit history, and covered wage growth,” the release said.
Rates for individual private employers are based on the ratio of average annual benefits they paid for the past five years to their average annual taxable payroll for those years.
Director of Iowa Workforce Development Beth Townsend said in the news release that the decision eases hiring for Iowa companies and “keeps Iowa competitive” for employers.
“Remaining in Tax Table 7 ensures Iowa businesses will continue to recover from the pandemic without facing additional costs,” Townsend said. “And like employers, we are working hard to make sure they have the skilled workforce they need to continue their recovery.”
The two main sources of revenue for the trust fund are federal unemployment tax and state unemployment compensation tax.
“Pandemic related layoffs would have pushed the fund balance down to $504 million at the end of 2020, but a deposit of coronavirus relief funds pushed the balance up to $994 million,” the 2020 Status Report of Iowa’s Unemployment Compensation Trust Fund said.
Reynolds said in her announcement regarding her directing of the relief funds that she wanted to minimize the impact of the pandemic on employers so they could focus on their growth in the state.
“Iowa’s employers continue to do an outstanding job during these unprecedented times and today’s action will provide them greater certainty,” she said. “This move also ensures that our trust fund remains healthy and in a position to weather any storm, including COVID-19.”
Iowa Workforce Development reported in a document regarding Iowa’s Unemployment Compensation Trust Fund that initial claims for unemployment more than tripled from 2019 (154,324) to 2020 (570,453). About $1.25 billion in benefits were paid in 2020.
“ABI supports this decision and appreciates it very much,” Iowa Association of Business and Industry President Michael Ralston told The Center Square in an emailed statement. “Iowa has some of the best benefits in the nation for unemployed workers. All the funds are paid by employers – as they should be. It matters when rates do not increase.”