Unemployment compensation (UC) tax rates for Pennsylvania businesses will decline by 1.1 percent in 2020, the lowest tax rate in 41 years, after the elimination of the UC tax rate interest factor.
The state was required in Act 60 of 2012 to refinance federal loans for UC through the sale of bonds to obtain the lowest possible rate of interest.
From 2013 to 2019, a 1.1 percent interest factor was assessed for businesses to repay the UC bonds. Repayment was completed on Jan. 1.
The UC Trust Fund’s solvency is calculated annually. It is considered solvent when its level reaches two and a half times, 250 percent, the average annual benefit payout over the last three years. In July, the percentage was 181 percent.
“We are continuing our efforts to drive down the cost of doing business in Pennsylvania,” said Gov. Tom Wolf. “Lowering the UC tax rate will help business owners invest in their own company and workforce to create more jobs, while also maintaining fair benefits for workers who lose their job through no fault of their own.”
The elimination of the tax rate will save businesses approximately $552 million in UC compensation and roughly $57 million in interest.