Unemployment insurance tax to be reduced next year
Maryland employers can expect to see the tax they pay for the state’s unemployment insurance program drop significantly next year. The Department of Labor, Licensing, and Regulation has announced the tax cut, which will reduce the unemployment insurance tax employers pay by as much as 50%. The tax cut will take effect next year and is being heralded as a sign of the state’s improving economy and employment situation. For some employers, the tax cut could mean that they will be able to continue providing health insurance benefits to workers.
Tax rates soared during height of economic crisis
Maryland’s unemployment insurance tax rose quickly several years ago due to the economic crisis that gripped the country. A poor economy caused many companies to shed workers or risk going out of business. State officials rose the unemployment insurance tax to help mitigate the financial burden that residents faces through losing their jobs. Employers were called upon to contribute more to the tax, which drove the state’s fund for jobless benefits up to $795 million after three years of maximum tax rates.
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Employers find encouragement to hire new workers
The timing of the tax cut is being considered fortuitous. Maryland businesses are beginning to hire again after years of looking to shed workers for the sake of financial stability. Some businesses have been slow to hire new workers due to the excessive unemployment insurance tax they had been paying. Once the tax cut kicks in next year, these employers are likely to find the encouragement they need to hire new workers.
New taxes may have an impact on businesses
Though the unemployment insurance tax is being significantly cut, there are 31 new tax rates being considered for next year that may have an impact on employers throughout Maryland. Lower unemployment insurance tax may be a sign of a recovering economy, but only time will tell whether this recovery is able to continue as new taxes are introduced and employers facing a changing health insurance landscape.