Each state has a set of unemployment tax rates subject to change each year. Understanding these rates is the key to correctly filing and paying your state unemployment contribution. While these numbers are updated on the State’s website, some of the rate titles are confusing or otherwise misleading. Below, we have included brief definitions of each of the Ohio contribution rates and how AMS can streamline your calculation process.
New Employer Rate
This is the rate you will need to pay if you are not yet eligible for the experience rate. In Ohio, the standard new employer rate is 2.7%. However, if you are involved in the construction industry, there is a separate, higher rate.
Experience Rate
This rate includes taxable wages reported, contributions paid (including voluntary payments), and benefits charged. Employers are eligible for an experience rate once their account has been chargeable (with benefits) for four consecutive calendar quarters. Any unemployment taxes paid are credited to an employer’s account.
Mutualized Rate
Mutualized accounts maintain the unemployment trust fund at safe levels, ensuring the ability to recover the potential costs of unemployment benefits that are not chargeable to individual employers. This money is generated through the mutualized tax, which is levied on all contributory employers. However, the rate is often very low or non-existent; in 2019, the rate is 0.0%.
Delinquency Rate
If you did not provide the necessary information to qualify for the experience rate by the time those rates were calculated, you are assigned a higher rate – approximately 125% of the maximum experience rate possible for that year. If you file the necessary information in time, however, your rate will be revised to the appropriate experience rate.
Penalty Rate
If you file the necessary wage information late (after December 31) but within 18 months of that date, your rate will be revised to 120% of the rate that would have applied. Simply, you will pay a higher rate as a penalty for filing late.
Changes to Ohio Unemployment Tax Rates
Each year brings changes to Ohio unemployment tax rates. While the Lowest Experience Rate and New Employer Rate have held constant since 2017, the Highest Experience Rate has gone up by 0.2% each year. For a full list of changes to Ohio unemployment tax rates, see the Department of Jobs and Family Services website.
Keeping Tabs on Ohio Unemployment Tax Rates
Tax rates change constantly, and if you’re not tuned-in to what’s required of your business, you risk paying the incorrect amount. While you can see updates to these taxes on Ohio’s state website, they are not always automatically factored into your calculations. Certain AMS products, like AMS Payroll Software, include updated tax tables for fast and easy reference, ensuring you always pay the exact amount you owe.
If you want to see just how convenient this service can be, we recommend downloading a free demo version of the software. If you have questions about any of our products or services, please call our Sales and Information team at 800-536-1099.