The Unemployment Insurance Agency has announced that beginning with the third quarter of 2015, Michigan’s employers will pay less in unemployment taxes due to a reduction in the state’s Taxable Wage Base.
Beginning with third quarter tax filings in October, Michigan’s Taxable Wage Base will decrease to $9,000 from its current rate of $9,500. The reduction translates to about $16 million less in taxes assessed during 2015, and $57 million less assessed during 2016, assuming the Taxable Wage Base stays at $9,000 throughout 2016.
The Taxable Wage Base is the annual amount of wages paid by an employer to an employee that are subject to state unemployment insurance taxes. These contributions fund unemployment benefits for employees who lose their jobs through no fault of their own.
The new Taxable Wage Base rate of $9,000 applies to contributing employers who pay unemployment taxes and who are not delinquent in paying unemployment contributions, penalties or interest.
Employers who have outstanding balances including unpaid penalties and interest will not be eligible for the reduced wage base. An employer is delinquent in the payment of unemployment contributions, penalties, or interest if on August 15, 2015, the contributing employer has an outstanding balance owed to the Agency of at least $25.
Employers who are eligible that have paid employees in excess of the prior wage base will not receive refunds for amounts paid in prior quarters. The wage base change IS NOT retroactive even though the amount is a cumulative for employees’ year to date earnings.
For more information about the Taxable Wage Base decrease, visit the UIA website at michigan.gov/uia
Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.