Iowa announces lowest unemployment insurance rates in two decades
DES MOINES — Gov. Kim Reynolds and Iowa Workforce Development announced Wednesday that the unemployment insurance rate schedule used to tax Iowa employers will fall to its lowest level in 24 years — the lowest rates currently allowed by Iowa law.
“Today’s announcement is great news for our employers who are already facing significantly increased costs due to historic inflation,” said Reynolds. “Iowa has faced the pandemic and its economic impacts head-on, and because of our conservative tax practices and careful investments in the Iowa Unemployment Trust Fund, taxes unemployment insurance in our state will soon reach their lowest rates since 1999.”
Iowa law requires Iowa Workforce Development to annually establish a table to determine unemployment tax rates that will impact eligible employers. The trigger for deciding which unemployment insurance rate table to implement is derived from a formula based primarily on Iowa’s unemployment insurance trust fund balance, unemployment benefit history, and growth covered wages.
Based on this formula, the assessment rates will be taken from Table 8 in calendar year 2023 after five consecutive years of being taken from Table 7. The change means that a company paying the median tax rate ( on employee salaries totaling $36,100 or more per year) and remaining at the same tax rank as in 2022 would pay $72.20 less per employee in unemployment taxes in 2023.
Last week’s announcement follows a decision by Reynolds last year to invest $237 million in ARP funds to stabilize the unemployment trust fund following record payouts due to COVID-19. 19. In 2020, amid record unemployment, Governor Reynolds also ordered that $490 million in CARES Act coronavirus relief funds be used to support the Unemployment Insurance Trust Fund.
“Governor Reynolds’ commitment to maintaining and preserving the Unemployment Trust Fund throughout the pandemic will result in real savings for Iowa employers in 2023,” said Beth Townsend, Director of Iowa’s workforce development. “Employers will see, on average, a 25% reduction in their unemployment taxes next year, and these savings will provide more resources for Iowa employers to invest in growing their businesses.”