Minnesota Businesses Save Big Thanks to Cut in Unemployment Insurance Taxes
ST. PAUL, MINN. – Minnesota businesses will save millions over the next two years because of a DFL-led Senate which voted to cut unemployment insurance taxes thanks to a steadily improving economy. The decrease in taxes was passed by the state legislature during the 2013 session and will go into effect January 1, 2014.
Proof that Minnesota is on the right path when it comes to stabilizing the economy and decreasing the unemployment rate, the state’s trust fund, which pays out unemployment checks, is projected to have reserves greater than $1.2 billion over the next few years. The fund went into deficit during the recession that began in 2002 and never fully recovered. A decrease in unemployment insurance taxes would have been automatically triggered in a few years time, but earlier this year Senators voted to speed up the process and help businesses save money now.
“Minnesota businesses are projected to save $346.5 million over the next two years and that will lead directly to improved bottom lines and greater investment in our state. We’ve already been seeing the effects of a healthier economy in our communities; it’s a welcome sign to see our state’s trust fund reserves greatly increasing thanks to a workforce that’s back on its feet.” Senator John Hoffman (DFL-Brooklyn Park, Champlin and Coon Rapids) said.
New jobs numbers released this week indicate the state is indeed doing well, with a net gain of 1,200 jobs added in September and October. Minnesota also consistently ranks near the top in economic factors – both as the 8th best state to do business and as having the 5th fastest growing economy in 2012. The Minnesota Department of Employment and Economic Development notes our state’s unemployment rate has dropped to 4.8 percent in October – the lowest it’s been since 2007.
Currently, Minnesota businesses pay unemployment insurances taxes on the first $29,000 of annual wages per employee. Effective January 1, the base tax rate they pay on that amount will be reduced from 0.5 percent to just 0.1 percent.