Iowa to collect less unemployment insurance tax in 2023

(The Center Square) – Unemployment insurance rates for taxing Iowa employers will drop to a 24-year record low with Table 8, Governor Kim Reynolds and Iowa Workforce Development announced Wednesday.

That’s the lowest rate Iowa law allows, the news release said. For the past five years, the state has drawn rates from Table 7.

A business paying the median tax rate (on employee wages totaling $36,100 or more annually) and remaining in the same tax rank as 2022 would pay $72.20 less per employee in unemployment taxes in 2023, the release said.

Under Iowa law, Iowa Workforce Development establishes a table each year to determine the unemployment tax rates that will impact eligible employers. Factors involved in a formula that determines the rates includes the balance in Iowa’s unemployment insurance trust fund, unemployment benefit history and covered wage growth, the release said.

“Today’s announcement is great news for our employers who are already dealing with significantly increased costs due to historic inflation,” Reynolds said. “Iowa faced the pandemic and its economic impacts head on, and due to our conservative fiscal practices and prudent investment in Iowa’s Unemployment Trust Fund, unemployment insurance taxes in our state will soon reach their lowest rates since 1999.”

Reynolds decided last year to use $237 million American Rescue Plan funds for the unemployment trust fund following record payouts due to COVID-19. Amid record unemployment in 2020, Reynolds directed that $490 million of CARES Act coronavirus relief funds support the unemployment insurance trust fund.

Iowa Workforce Development Director Beth Townsend said Reynolds’ management of the unemployment trust fund throughout the pandemic will allow Iowa employers to save money in 2023.

“Employers will see, on average, a 25 percent reduction in their unemployment taxes next year, and those savings will provide more resources for Iowa employers to invest in growing their businesses,” Townsend said.

Iowa Workforce Development announced Aug. 18 that the state’s seasonally adjusted unemployment rate was 2.5% in July, down from 2.6% in June and 4.4% a year ago. Nationally, the U.S. unemployment rate decreased to 3.5% in July.

About 43,300 Iowans were declared as unemployed in July. There were 1,667,200 working Iowans, which is 58,600 higher compared with July 2021.

The labor force participation rate was 67.8% in July. The state added 3,800 nonfarm payroll jobs that month in its fourth consecutive monthly increase.

Professional and business services and health care are especially making gains. Government added jobs at the local level and in temporary summer programs. Health care and social assistance gained 1,300 jobs from June, surpassing other sectors’ July gains.

Seasonal staff, including in landscaping, contributed to job gains in administrative support, waste management and remediation industries.

Retail trade, particularly for miscellaneous store retailers, lost jobs for the fifth straight month. Construction, financial activities and leisure and hospitality also experienced losses.

In the past year, Iowa firms have added 33,900 jobs. Leisure and hospitality have gained 10,100 of those jobs. Slaughtering and meat packing, along with transportation and warehousing, have had strong hiring.

Free News Delivery by Email

Would you like to have the day's news stories delivered right to your inbox every evening? Enter your email below to start!

Leave a Reply

Your email address will not be published.