Unemployment rate hike goes into effect with new year

America Dollars
Business until Jan. 11 may protest any increase in rates.

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.

The increase in the bottom rate comes as the state continues to wrestle with massive numbers of new unemployment claims. About 67,000 more jobless claims were filed a week before Christmas.

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.

Jacob Ogles

Jacob Ogles has covered politics in Florida since 2000 for regional outlets including SRQ Magazine in Sarasota, The News-Press in Fort Myers and The Daily Commercial in Leesburg. His work has appeared nationally in The Advocate, Wired and other publications. Events like SRQ’s Where The Votes Are workshops made Ogles one of Southwest Florida’s most respected political analysts, and outlets like WWSB ABC 7 and WSRQ Sarasota have featured his insights. He can be reached at [email protected].

One comment

  • Sonja Fitch

    January 2, 2021 at 3:13 pm

    Ok when was the new rate passed? Is there a need to go back and look for the feasibility due to covid? If there is 800 million surplus ? in the fund, what amount being paid unemployment is Florida taxes or the Federal care dollars ? Ask these questions and get answers please!

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