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Additional UI tax relief for eligible employers in 2022

 

In addition to Senate Bill 5061, the state Legislature also passed ESSB 5478 in 2021. It gives $500 million in additional financial relief to taxable employers for offsetting benefit charges from COVID-19 related claims. The offset will result in lower tax rates for many employers who were projected to have the largest tax increases.


These employers will see relief on their 2022 tax rate notice. The notice will show the forgiveness ratio, as well as any reduced benefit charges.

 

Which employers were eligible?

  • Category 1 - Small businesses (20 or fewer employees) most directly affected by the pandemic whose 2022 tax rates were projected to jump 3 or more rate classes.
  • Category 2 - Larger businesses most directly affected by the pandemic whose 2022 tax rates were projected to jump 3 or more rate classes.
  • Category 3 - All other small business (20 or fewer employees) with projected jumps of 4 or more rate classes.
  • Category 4 - All other larger businesses with projected jumps of 4 or more rate classes.

SB 5478 provided relief only to taxable employers whose tax rates were projected to increase more than 3 or 4 rate classes from 2021 to 2022. 

Employers who were past due with their quarterly tax payment were eligible because we could still calculate their tax rate.

Which employers were not eligible?

Since reimbursable employers do not have tax rates, they were not eligible for relief in this bill.

Employers who were past due with their quarterly tax report were not eligible for financial relief from SB 5478 because we did not have the information we needed to accurately calculate their tax rate.

How much relief did eligible employers get?

The goal of the legislation was to minimize rate increases for businesses who were projected to see the biggest tax hikes. The $500 million in benefit charge relief succeeded in keeping 2022 rates much lower for those businesses.

  • Categories 1 and 2 will get the highest rate of relief. These categories include over 11,000 employers.
    • Category 1 employers will see an average increase of 2 rate classes instead of 13.
    • Category 2 employers will see an average increase of 4 rate classes instead of 10.

  • Categories 3 and 4 will get a lower rate of relief. These categories include over 26,000 employers.
    • Category 3 employers will see an average increase of 11 rate classes instead of 14.
    • Category 4 employers will see an average increase of 6 rate classes instead of 7.

If you have questions about your industry classification, consult the U.S. Bureau of Labor Statistics industry finder tool.


If you saw your tax rate increase

Despite help from both SB 5061 and ESSB 5478, you still might see your 2022 tax rate increase. Two reasons:

  • ESSB 5478 was designed to reduce the amount of tax rate increases, not completely eliminate all tax rate increases.
  • All employers saw an increase in the social tax, which is a shared-cost tax designed to allocate costs across all employers when those costs cannot be charged to a specific employer. In 2021, the flat social tax was set at 0.50%. For 2022, the flat social tax was set at 0.75%.


If you disagree with your tax rate calculation following financial relief from ESSB 5478, you can request a tax rate recalculation within 30 days of the tax rate notice. This is the same way you'd challenge any other tax rate.


If ESD denies your request, you can file an appeal within 30 days of the denial.


Category 1 and 2 employers

Industries

  • Printing and related support activities
  • Primary metal manufacturing
  • Clothing and clothing accessories stores
  • Sports, hobby, music instrument, book stores
  • Miscellaneous store retailers
  • Air transportation
  • Transit and ground passenger transportation
  • Scenic and sightseeing transportation
  • Motion picture and sound recording industries
  • Performing arts and spectator sports
  • Museums, historical sites, zoos and parks
  • Amusements, gambling and recreation
  • Accommodation
  • Food services and drinking places
  • Personal and laundry services
  • Private households

Category 3 and 4 employers

Employers in all other industries whose tax rate was originally supposed to increase by at least three tax-rate classes received some relief to reduce the amount of the increase.