Strategic investments by Governor Mills will reduce unemployment taxes in 2023
The Mills Administration announced today that many Maine businesses will see a significant reduction in unemployment taxes next year thanks to strategic investments by Governor Mills in Maine’s unemployment trust fund.
In 2020 and 2021, Governor Mills directed that $382 million in Federal COVID relief funding be invested in Maine’s unemployment trust fund to prevent tax increases on Maine’s small businesses caused by unprecedented pressure on Maine’s unemployment compensation system. Because of these investments, Maine’s unemployment trust fund remained solvent during the pandemic, unlike many states that had to borrow and repay billions of dollars with interest to the federal government.
As a result of these investments and Maine’s strong economic recovery, the unemployment trust fund currently stands at more than $600 million. The health of the fund means that unemployment taxes will be collected under Schedule A next year, the lowest allowed under Maine law, saving Maine employers a total of $23.7 million. The average unemployment tax per employee is expected to be $236.40 per year, a decrease of $32.40 from the average in 2022. Each employer’s experience rating is unique, therefore the tax change will vary by employer.
“By strengthening our Unemployment Trust Fund, we have saved Maine businesses millions of dollars on their taxes and prepared Maine workers to weather future economic challenges if they do occur,” said Governor Janet Mills. “My Administration will continue to do all we can to support businesses in the State of Maine.”
“This is welcome news for Maine employers who pay into the unemployment trust fund so that, when needed, it can fulfill its role as a critical economic stabilizer for families, communities, and businesses,” said Commissioner Laura Fortman. “Due to the Governor’s good fiscal management, the trust fund has remained solvent and is available to serve this important role in the future.”
Without investments by Governor Mills, the 2023 unemployment tax schedule would have increased from Schedule B to Schedule D, increasing unemployment taxes on Maine businesses by $47 million. Instead, the schedule will switch from Schedule B to Schedule A, the lowest unemployment tax schedule under Maine law.
The state unemployment trust fund provides unemployment insurance to eligible Maine people who lose their job through no fault of their own. Maine’s current unemployment rate of 3.3 percent is below the national average.
This news builds on Governor Mills’ work to bring down costs for small businesses. Earlier this year, Governor Mills announced that, as the result of a bill she proposed and signed into law, many Maine small businesses will see their first annual average reduction in health insurance premiums since at least 2001.
Unemployment taxes are assessed on the first $12,000 in wages on each employee during the calendar year. Approximately 48,000 employers in Maine pay into the unemployment trust fund based on the statutory tax rates that consider each employer’s unemployment experience.
The balance of the trust fund is updated once a month at https://www.maine.gov/labor/cwri/ui.html.