Tennessee employers, take note: State Unemployment Insurance rates will not be adjusted at the beginning of this year as a result of the Unemployment Insurance Trust Fund balance.
At the beginning of the new year, Tennessee adjusts emloyer’s unemployment insurance rates based on the balance of the state’s Unemployment Insurance Trust Fund. If the fund balance shows an increase, to a certain mandated level, UI rates can be reduced. If the fund balance decreases, UI rates can be increased to help increase the fund balance. According to the state, rate calculations will remain under table 1, the table indicating the highest that rates can be adjusted due to low trust fund balances.
Rates range from .5% to 4.5% for employers who have a positive balance in their individual unemployment insurance accounts, 5% to 10% for those businesses who have a negative balance.
Tennessee is the only state that adjusts a business’s unemployment insurance tax rate two times a year. In the beginning of the year, UI tax rates are adjusted based on state’s UI Trust Fund balances. Mid year (July 1), UI tax rates can be adjusted again due to the claim “experience” (the value of claims for benefits by former employees) of the individual business. In both instances, businesses are notified of rate changes retroactively, usually in February and August. This is important information for payroll service bureaus like Time & Pay who concentrate on payroll tax compliance.