Unemployment insurance tax rates for 86.3% of SC employers will remain unchanged or decrease in 2021, and there will be no fixed rate tax increase for employers, announced the SC Department of Employment and Workforce.
The agency credited the $ 920 million SC General Assembly approval for pandemic relief to freeze 2021 taxes and replenish the state’s Unemployment Insurance Trust Fund.
“We expect to save South Carolina employers about $ 172.4 million in SD taxes in 2021, significantly reducing the impact of the pandemic on employers,” said Dan Ellzey, executive director of DEW, in a statement from agency. “It keeps the money in the pockets of companies as they look for additional ways to rebuild, reopen and continue to rehire.”
From 2019 to 2020, SC companies saw an average reduction of around 34% in unemployment tax rates.
Typically, employers’ tax ranges are based on using the UI Trust Fund, with companies incurring more taxes for further layoffs, but in March, DEW announced that employers would not be financially penalized for any COVID-related job losses -19.
Without funding from the CARES Act, the fund would have faced reconstruction of approximately $ 885 million between 2022 and 2025, said the DEW. Because of the additional resources, current projections show an expected rebuild between $ 6.1 and $ 73.6 million over the next four years, the agency said.
Individual companies can still move between tax classes based on past or non-pandemic unemployment insurance claim activity. Tax rate notices will be sent to businesses on Friday and are available online in the accounts of the state’s unemployment insurance tax system (.pdf). Tax rates for 2021 are also available online.
South Carolina borrowed almost $ 1 billion from the federal government from 2008-2011 during the Great Recession to provide unemployment benefits. This loan was repaid in early 2015, the same year that the Legislature required the DEW to rebuild the trust fund in five years to a level that would cover the benefit needs of a typical recession cycle.
The fund became solvent last November.
“South Carolina is fortunate to have understood the importance of fiscal responsibility while enjoying the largest economy in our state’s history,” said SC Governor Henry McMaster in the statement. “No one could have predicted the impact of the pandemic on our nation and state, but because of our collaboration with DEW leadership and members of the General Assembly, we were able to be confident that our state’s unemployment system was financially prepared.”