DLT: 2016 UI taxable wage $800 higher for most employers

THE 2016 unemployment insurance taxable wage base will be $22,000 for most employers in Rhode Island, an increase of $800, the state Department of Labor and Training said.
THE 2016 unemployment insurance taxable wage base will be $22,000 for most employers in Rhode Island, an increase of $800, the state Department of Labor and Training said.

CRANSTON – The 2016 unemployment insurance taxable wage base will be $22,000 for most employers in Rhode Island, an increase of $800, the state Department of Labor and Training said this week.

The state agency said that by law, the UI taxable wage represents 46.5 percent of the average annual wage in Rhode Island.

The wage base limits the amount of wages that are taxable, but tax rates for individual employers vary according to their experience with the UI system, DLT said. Rates range from a minimum of 1.69 percent to a maximum of 9.79 percent.

As a result, the lower an employer’s “experience rate,” the less tax the employer pays, DLT said.

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Employers will be notified of their new individual tax rates next month. New employers will have a 2.27 percent rate for 2016, a decrease of 0.47 of a percentage point from 2015’s rate, DLT said.

The 2016 taxable wage base for those employers in the highest UI tax rate – 9.79 percent – group will be $23,500, which is $1,500 greater than the taxable wage base for all other employers, per state law.

The higher wage base affects approximately 15 percent of Rhode Island experience-rated employers and is intended to help offset the “large drain” these employers have on the Employment Security Trust Fund, DLT said.

The DLT said that last year, 30 percent of all UI benefit payments were attributed to the top 15 percent of Rhode Island experience-rated employers.

The Employment Security Fund is financed by assessments from 32,200 businesses in the state and covers the cost of unemployment insurance benefits for Rhode Island workers. The fund’s taxable wage base represents the maximum amount of an employee’s earned wages subject to taxation in any given year.

The employee contribution rate to the Temporary Disability Insurance Fund will remain at 1.2 percent next year. It has remained unchanged since 2012, DLT said

TDI provides benefit payments to insured Rhode Island workers for weeks of unemployment caused by disability. Last year, approximately 403,000 workers contributed to the TDI fund. Rhode Island workers fund TDI, the state agency said.

Also in 2016, the TDI taxable wage base will be $66,300, an increase of $2,100 compared with last year’s taxable wage base.

In addition, DLT said that Temporary Caregiver Insurance claims accounted for 16 percent of the total number of initial TDI applications filed with the agency through October. TCI provides eligible claimants with up to four weeks of caregiver benefits to care for a seriously ill child, spouse, domestic partner, parent, parent-in-law or grandparent or to bond with a newborn child, new adopted child or new foster-care child.

TCI is Temporary Disability Insurance for TCI purposes, DLT said.

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