CRANSTON – Rhode Island businesses won’t see an increase in their unemployment insurance tax rate for 2022 even though the trust fund that keeps benefits flowing was heavily used this year, according to state labor officials.
The R.I. Department of Labor and Training has announced that tax rates will remain in the range of 1.2% and 9.8% next year, and the rate for new employers will be 1.19%, based on the state’s five-year benefit cost rate for new employers.
These rates include a 0.21% Job Development Assessment.
Also, the unemployment insurance taxable wage base for most Rhode Island companies will remain at $24,600. For employers at the highest tax rate, the taxable wage will be set at $26,100.
The DLT said a tax increase was avoided because Gov. Daniel J. McKee signed an executive order in October extending the dates used to calculate rates for the coming year. This allowed the unemployment insurance trust fund to accumulate a larger balance before the new rates were calculated in November, DLT said.
The trust fund stood at $156.4 million at the end of June but rebounded to $208.9 million, as of Dec. 16, according to the DLT. The trust fund is the pool from which unemployment insurance benefits are dispersed to the state’s unemployed claimants.
“We were afforded the flexibility to be able to prevent an increase in UI taxes for employers in the coming year,” DLT Director Matthew Weldon said. “Employers have faced enormous challenges during the pandemic, and we are fortunate that we were able to avoid placing an additional burden on them as the state’s economy continues to recover and improve.”
The DLT also said the Temporary Disability Insurance contribution rate will be 1.1% for 2022. The TDI contribution rate was 1.3% this year.
The state’s UI tax rates are calculated using a statutory formula based on the balance of the state’s employment security fund. Because of the high number of unemployment claimants in 2021 resulting from the COVID-19 pandemic, the UI trust fund was more heavily utilized than in previous years, the state said.
The UI taxable wage base is set at 46.5% of the average annual wage of workers at taxable employers. For 2021, this was calculated using average annual wage data for calendar year 2019. Given that the unprecedented pandemic-related job losses in 2020 disproportionately impacted lower wage earners, using the average annual wage for 2020 would have raised the taxable wage base to a level inconsistent with current economic conditions.
The TDI taxable wage base, which is equal to the annual earnings needed by an individual to qualify for the maximum weekly benefit rate, will be $81,500 in 2022, an increase of $7,500 from the 2021 taxable wage base of $74,000.
Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com. You may also follow him on Twitter @CassiusShuman.
