MN Revises 2022 Unemployment Insurance Tax Rates

At a Glance

• 2022 Additional Assessment changed from 14% to 0.00%.
• 2022 Special Assessment (Federal Interest Loan Assessment) changed from 1.8% to 0.00%.

Introduction

On April 29th ,2022 governor Tim Walz signed Into law Bill SF 2677 which appropriates funds to fully repay the state's loan from the federal unemployment trust fund. The measure also reduces Minnesota's unemployment tax rates for 2022 and 2023.

The base tax rate, which is added to an employer’s experience rate to determine its total tax rate, was reduced to 0.1% from 0.5% for 2022 and 2023.

The Additional Assessment of 14% of the tax due is no longer in effect for 2022 or 2023.

The federal loan interest assessment tax rate of 1.8% is also no longer in effect.

Unemployment tax rates are to be recalculated to reflect the new rate adjustments. Employers that have already paid the 1st quarter 2022 taxes will most likely receive a credit if the account is in good standing. The credit is to be automatically applied to the 2nd quarter 2022 payment. Employers will need to request a refund directly with the agency for any credits remaining, note it may take several months for a refund check to process.

Next Steps

The agency will recalculate the unemployment insurance tax amount for 1st quarter 2022. The recalculation process will take one to two weeks to complete. A letter will be sent to the employer and the website will be updated once the recalculation is complete.

Paylocity will update the new rates once they become available and make necessary adjustments for Q2 2022.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner.

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.