Nevada State Unemployement Insurance (SUI) Outlook

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taxes

Our office has received several calls from work-site owners and managers asking what to expect regarding  State Unemployment Insurance (SUI) rates for the 2011 tax year.  While we cant predict exactly what is going to happen (final decisions are not expected until early-mid December,) we can share information gathered from  conversations with our legislative insider.

The negative effect the sluggish economy has had on the Nevada Unemployment reserves and general fund is no secret.  The unemployment rate in Nevada is a currently at 14.4%, the worst in the country.  With benefit eligibility and payments being extended to provide basic needs for unemployed workers, the fund has become grossly overdrawn.  When this happens, the state government must borrow from the federal government in order to continue benefits.  Nevada began borrowing from the federal government in October 2009; the loan balance is now over $555 million.

For a list of unemployment insurance Trust Fund Loans by State click here

What can Nevada businesses expect?

In 2010, Nevada was one of sixteen states with no SUI tax increase.  Doing so again is unsustainable – rates will increase in 2011.  Nevada employers should expect a combination of decreased spending through budget cuts and increased revenue raised through higher taxation to help replenish the SUI fund deficit.  At this point in time, we don’t know to what level the unemployment tax rates will increase, but we do know rates are going to increase. Our best guess is an across-the-board, flat increase levied to all employers doing business in Nevada.  In this case, all employers will equally bear the burden of (1) paying unemployment benefits and (2) repaying the loan to the federal government over many years to come.

We share this opinion just so our clients are prepared for certain increased UI costs.  In addition, it is important to know, the increase will affect all Nevada businesses, not just clients of AdvanStaff HR.

Important Dates:

  • Dec 7, 2010 – Decision by legislature expected
  • Dec 15, 2010 – Employers notified of new rates
  • January 1, 2011 – New rates become effective

We will keep you posted on any news we receive.