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California Employer UI Taxes Set for Steady Annual Increases – Lake County Chamber of Commerce.
$10.7 Billion Unemployment Insurance Fund Deficit
Forecast by End of Year
Persistent high unemployment in California and the continuing insolvency of its unemployment insurance (UI) fund mean employers in California will be paying ever-increasing federal taxes for years to come—unless there is corrective action.
California is one of 28 states listed on the U.S. Department of Labor website as having an outstanding loan from the Federal Unemployment Account (FUA), accounting for 26% of the total $38.85 billion owed as of February 29.
California’s outstanding loan balance of more than $10.2 billion is close to triple (2.75 times greater than) that of the state with the next highest balance (New York, which owes more than $3.7 billion).
Each employer pays a tax rate based in part on the amount of benefits that have been paid to former employees. During good economic times, employers that have fewer claims are rewarded with a lower tax rate.
Because of the continuing financial difficulties facing the UI Trust Fund, all employers in California are paying state taxes under the highest schedule rate allowable under state law, plus a 15% solvency surcharge.
What this means for clients of In-Home Caregiver companies is higher fees (to cover the higher employer taxes) now, and for years to come.