DES MOINES – Gov. Kim Reynolds and Iowa Workforce Development announced on Wednesday the schedule of unemployment insurance rates used to tax Iowa employers will drop to its lowest level in 24 years – the lowest rates currently allowed by Iowa law.
“Today’s announcement is great news for our employers who are already dealing with significantly increased costs due to historic inflation,” Reynolds said. “Iowa faced the pandemic and its economic impacts head on, and due to our conservative fiscal practices and prudent investment in Iowa’s Unemployment Trust Fund, unemployment insurance taxes in our state will soon reach their lowest rates since 1999.”
Iowa law requires Iowa Workforce Development to establish a table each year to determine the unemployment tax rates that will impact eligible employers. The trigger for deciding which unemployment insurance rate table to implement is derived from a formula based primarily on the balance in Iowa’s unemployment insurance trust fund, unemployment benefit history, and covered wage growth.
Based on this formula, contribution rates will be drawn from Table 8 in calendar 2023 after five consecutive years of being drawn from Table 7. The switch means that a business paying the median tax rate (on employee wages totaling $36,100 or more annually) and remaining in the same tax rank as 2022 would pay $72.20 less per employee in unemployment taxes in 2023.
Last week’s announcement follows a decision by Reynolds last year to invest $237 million in ARP funds to stabilize the unemployment trust fund following record payouts due to COVID-19. In 2020, at the heart of record unemployment, Gov. Reynolds also directed that $490 million of CARES Act coronavirus relief funds be used to support the UI trust fund.
“Governor Reynolds’ commitment to maintaining and preserving the Unemployment Trust Fund throughout the pandemic will result in real savings for Iowa employers in 2023,” said Beth Townsend, Director of Iowa Workforce Development. “Employers will see, on average, a 25 percent reduction in their unemployment taxes next year, and those savings will provide more resources for Iowa employers to invest in growing their businesses.”