Page 21 - Payroll State Tax Filing Forms

Unemployment Insurance (3/5)

UI Tax

The UI program is part of a national program
administered by the US Department of Labor
under the Social Security Act. The UI program
provides temporary payments to people who
are unemployed through no fault of their own.

UI is paid by the employer. Tax-rated employers
pay a percentage on the first $7,000 in wages
paid to each employee in a calendar year. The
UI rate schedule and amount of taxable wages
are determined annually. New employers pay
3.4 percent (.034) for a period of two to three
years. The EDD notifies employers of their new
rate each December. The maximum tax is $434
per employee per year (calculated at the
highest UI tax rate of 6.2 percent x $7,000.)

Governmental and certain nonprofit employers
may elect the reimbursable method of
financing UI. They reimburse the UI Fund on a
dollar-for-dollar basis for all benefits paid to
their former employees.
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