Beginning Jan. 1, the unemployment tax rate will go up for businesses in Florida as claims continue to rise. A surge in new claims driven by the pandemic continued in December.
The minimum unemployment tax rate on the first day of the year jumps from 0.1% to 0.29%, nearly tripling the lowest rate assessed to businesses, according to the Florida Department of Revenue. The maximum tax rate remains at 5.4%, except for those employers participating in the Short-Time Compensation Program. The rate will be imposed on annual wages of up to $7,000 per employee.
When a new employee becomes liable for re-employment taxes, the initial rate continues to be 2.7% and holds at that level for 10 quarters. The account at that point gets rated based on the total benefits charged based on payroll from a running seven-quarter period.
But of note, the tax increase will not generate an immediate leap in revenue for the Department of Economic Opportunity immediately. The state allows a period of time for employee protests. The deadline for businesses to challenge the 2021 tax rates is set for Jan. 11, about 10 days after the rates are set to take effect. Protests must be submitted in writing, email or fax to the Department of Revenue. When employers elect to dispute the charges, that triggers a review of the individual employer.
Officials with the Department of Economic Opportunity stressed the taxes also are intended to rebuild a trust fund so that the money isn’t immediately needed despite the surge in claims. The trust fund covering state re-employment assistance claims still has around $800 million.
The majority of claims right now are also being paid through federal funds from the CARES Act.