Tax Rates and Employer Account Percentages
On December 31 of each year, the Department reviews each employer's account as part of the tax rating process. We complete the account review mid-February. We notify employers of their account condition on the Notice of Unemployment Insurance Tax Rate (IA 97) in March.
An employer's account balance is:
Account Balance = All normal tax contributions you pay on time - (less) Any unemployment benefits charged to your account
(If your account balance as of December 31 is positive, you may choose to make a payment to raise the positive account balance. This will lower your tax rate. You can compute the amount of the voluntary payment on the worksheet, or contact the Employer Account Adjustment Section.
When the benefits charged to your account exceed your contributions, the balance in the account is negative.
Negative Account Balance - Less than 21% of the prior year taxable wages
- We assign you a higher tax rate than if you have a positive balance.
- A voluntary contribution equal to or greater than the negative balance will reduce your tax rate.
Negative Account Balance - More than 21% of the prior year taxable wages
- We remove any balance more than that amount from your account.
- We notify you of this in February.
- We calculate your tax rate for the next year on the amount in your account before we remove the balance.
- We automatically assign you the maximum normal tax rate in the appropriate. Size of Fund Index column for the next three years.
- We do not review your experience for three years.
We write off an excess negative balance on December 31, of the current year. We calculate your tax rate for the next year on the negative account balance and must assign you the maximum normal rate in the appropriate Size of Fund Index column for the next three years.
You may choose to make a payment to offset the amount of the account balance we transfer. If you do, we will re-determine your current year tax rate calculation. This will stop the automatic assignment of the maximum normal tax rate for the next three rate years.
Before you send a voluntary contribution, review your current and future employment situation to see if the amount you pay will be greater or less than the money you save with a lower tax rate.
Voluntary contributions are not subject to a refund or credit. Voluntary contributions will not be accepted if all obligations are not met by the employer. This would include outstanding liabilities, missing returns and/or failure to submit requested information. In those instances, the payment would be applied to any outstanding liabilities. If there are no liabilities or the payment exceeds the liabilities, the remaining payment may be refunded.
For details about voluntary contributions, see our worksheet.
If you have questions about your experience rating account or tax rate, please call the Employer Account Adjustment Section. Have your Employer Registration Number handy.
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