MONTGOMERY — Most Alabama employers will see a 54% tax cut in their 2023 unemployment insurance taxes and the state has dropped into the lowest tax rate schedule, the state Department of Labor announced.
“Following the economic uncertainty and the record-breaking amount of unemployment compensation benefits paid out during the pandemic, it is absolutely remarkable that we have been able to lower taxes for employers and drop to the lowest tax rate schedule in this short amount of time,” said Labor Secretary Fitzgerald Washington.
This is the first time Alabama has dropped into the lowest tax rate schedule since 1997, the department said. This year’s average tax rate is also the lowest in recorded history.
Additionally, no shared costs will be incurred by employers this year, following several years of shared costs collections related to the pandemic.
National Federation of Independent Business State Director Rosemary Elebash said the announcement that most employers in the state will see a 54% reduction in their 2023 unemployment insurance taxes is welcome news for Alabama’s small businesses.
“Small businesses have really struggled financially these past several years because of the pandemic, labor and supply chain issues and inflation,” she said. “This announcement is one more sign that things are turning around.
“The money Main Street businesses save on unemployment insurance taxes is money they can spend on additional staff and other expenses.”
Gov. Kay Ivey said the announcement shows the state is recovering from the pandemic.
“This announcement today is further proof of how well Alabama is recovering from the pandemic – not in nearly thirty years have our employers seen a UI tax schedule at the lowest level – and the rates are the lowest in history, to boot,” she said. “Our economic decisions during this time of national economic uncertainty are paying off — by putting more money in employers’ tills and allowing them to hire more Alabamians, benefiting the state as a whole.
“I’m beyond proud to lead an administration that is delivering real, effective tax savings to our people.”
The current Alabama Unemployment Tax Schedule consists of four tax rate schedules: A, B, C, and D. The original intent of the four schedules was to assist in the recovery of benefit costs so that the UI Trust Fund, from which benefits are paid, will neither become depleted nor collect excess revenue. The objective is to maintain an adequate balance so that benefits can be paid when necessary. Therefore, the balance in the trust fund determines which schedule will be in effect for the upcoming calendar year.
“Lower taxes allow businesses to hire more employees and spur spending,” said Washington. “This record low tax rate is further evidence of Alabama’s economic recovery and shows how resilient we have been as a state.”
Business owners can now download their individual 2023 unemployment insurance tax rate notices online at www.labor.alabama.gov/eGov/login.aspx. Customers should simply login to their eGov account to see their rate.
Unemployment Insurance taxes are paid 100% by employers on the first $8,000 of wages earned per employee.
For questions regarding a business’s unemployment insurance tax rate, call 334-954-4741.
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