All employers, except those making reimbursable payments, have an assigned tax rate. An employer's rate may change each year. The Division of Employment Security (DES) calculates the tax rates for all employers.
For its first two or three years, an employer receives the new employer rate. This is a rate assigned to all new employers of the same industrial classification. Once an employer becomes eligible for an experience rate, a rate is calculated based on the ratio between an employer's average annual taxable payroll, unemployment claims against its account, and taxes paid in previously by the employer. Scroll down for a general explanation of tax rates, or choose a topic for additional or more detailed information.
- Beginning Tax Rates
- Experience Rate
- Benefit Charges
- Surcharges and Adjustments
- FUTA Tax
- SUTA Dumping
- Taxable Wage Base
Beginning Tax Rates
Each employer that becomes liable to report workers' wages and pay unemployment taxes is assigned to an industrial classification division. Until eligible for an experience rate, regular employers (not including governmental entities and certain nonprofit organizations) are assigned an annual tax rate that is the average tax rate computed during the preceding year of all employers within the industrial classification division to which the employer is assigned (prior to CRA), or 2.7 percent, whichever is the highest.
New Employer Rates — 2019 through 2023
|Calendar Year||Mining (*21)||Construction (*23)||Nonprofit (501(c)(3))||All Others|
|*Industries that have or have had special rates.|
Note: The tax rates above include applicable contribution rate adjustments.
Based on the average cash balance of the Unemployment Trust Fund, there may be an increase or decrease to these annual rates (see Contribution Rate Adjustment).
Nonprofit organizations described under Section 501(c)(3) of the Internal Revenue Code and governmental entities are assigned an annual tax rate of 1.0 percent until eligible for an experience rate. These organizations also have the option of making reimbursable payments.
Employers participating in the Shared Work Program would be assigned a rate of 9.0 percent plus any applicable maximum rate surcharge and contribution rate adjustment, if applicable, until eligible for an experience rate.
The Missouri Employment Security Law includes a merit or experience rating provision as an incentive for employers to maintain stable employment, review claims, and reduce unemployment.
The Division keeps a record of experience for each employer's account. The experience includes taxable wages reported, contributions paid (including voluntary payments), and benefits charged. Unemployment taxes paid are credited to an employer's account. Unemployment benefits paid to eligible claimants are charged against the accounts of the claimant's employers during the base period of the claim. These factors, which are recorded in the employer's account through the preceding July 31st, are used to compute annual tax rates after the employer becomes eligible for an experience rate. An employer generally becomes eligible for an experience rate after two full calendar years of liability under the law.
An experience rate is based on a ratio arrived at by dividing an employer's account balance by its average annual taxable payroll. Rates could range from 0.0% to 6.0%, not including maximum rate surcharge and/or contribution rate adjustment. Rates for employers participating in the Shared Work Program could range from 0.0% to 9.0%, also not including maximum rate surcharge and/or contribution rate adjustment. For additional information, see Missouri Revised Statutes, Chapter 288.
An employer's account balance is the difference between total benefits charged and contributions paid, plus any unassigned surplus, through the preceding July 31st.
Depending on how long an employer was subject to the law and reported quarterly wages prior to the last July 1st, an employer's average annual taxable payroll is either:
- One-third of the total taxable wages paid during the 36-month period prior to the last July 1st, or
- If no wages for employment were paid during any one calendar half year in the 36-month period prior to the last July 1st, the average annual taxable payroll is twice the amount of taxable wages paid during the calendar half year in this period wherein the taxable payroll was highest, or
- The average annual payroll is the total taxable wages paid during the 12-month period prior to the last July 1st, or
- If no wages for employment were paid during any one calendar half year in the 12-month period prior to the last July 1st, the average annual payroll is twice the amount of taxable wages paid during the calendar half year in the 24-month period prior to the last July 1st wherein the taxable payroll was highest.
A determination of the annual tax rate for the following year is mailed to all employers during the month of November. Such determinations are subject to appeal and a hearing by an Appeals Tribunal, provided a protest is made in writing or by fax within 30 days of the mailing date of the rate determination. (See Appeal Rights.)
If eligible, you will also receive a worksheet regarding making voluntary payments.
Benefit charges result from claims filed against an employer’s account by former or current employees who are now unemployed or under-employed. Charges can negatively affect an employer’s experience rate. If a claimant has multiple employers in his or her base period, each employer will be charged for the percentage of the unemployment benefits paid that is equal to the percentage of wages it paid the claimant. For example: If company A paid a claimant 75 percent of the total wages in the claimant’s base period, company A would be responsible for 75 percent of the benefit charges, etc.
Charges to Accounts of Contributing Employers
A contributing employer's account is charged with the unemployment benefits paid out based on the percentage of base period wages paid by the employer that were used to establish a claim. Charges for contributing employers are not amounts the employer must pay; instead, the DES tracks these charges and uses them when figuring an employer's tax rate.
Reimbursing employers are billed directly (dollar for dollar) for the entire amount of regular unemployment insurance (UI) benefits.
Reimbursable debits are not charged or credited to an employer's experience rating account. This method of financing benefits begins with respect to benefits paid for weeks of unemployment that occur after the effective date of an election to change to the reimbursing method. Reimbursing employers are mailed a debit/credit memorandum with the Statement of Benefit Charges at the end of each quarter.
Account Charge Protection
As provided for in Section 288.100 of the Missouri Revised Statutes, unemployment benefit payments are not charged to a contributing employer's experience account if the DES investigation or employer protest shows that:
- The claimant quit the employer to accept more remunerative (higher paying) work or failed without good cause to accept suitable work offered by the employer;
- The claimant was disqualified for being discharged due to misconduct connected with the work or the claimant quit without good cause attributable to the work or the employer;
- The claimant was paid less than $400 by the employer during the entire base period of the claim;
- The claimant was properly reported as a probationary worker whose period of employment for the employer was 28 consecutive days or less;
- The claimant is a part time employee who remains employed to the same extent each week AND the employer notifies the DES each quarter within 30 days from the mailing date of the Statement of Benefit Charges of the part time employment.
- The claimant quit temporary work from the employer to return to work for a regular employer. Any benefits paid claimant based on wages paid by such temporary employer are charged to claimant's regular employer.
- The claimant quit work, which was determined not suitable, within 28 calendar days of the first day worked.
- The claimant was discharged when the employer was required to discharge him or her because the claimant's name was placed on a disqualification list maintained by the Missouri Department of Health and Senior Services or an Employee Disqualification Registry maintained by the Department of Mental Health after date of hire.
- The claimant quit work to accompany his or her spouse who received a mandatory and permanent military change of order station.
Important Note: There is no account charge protection for reimbursing employers. They are liable for their portion of unemployment benefit payments. Employers are mailed a quarterly statement of benefits charged to their respective accounts. Statement of Benefit Charges are always mailed to an employer's principal mailing address. For other information on Benefit Charges, contact the DES at 573-751-4034.
Surcharges and Adjustments
Maximum Rate Surcharge
If an employer has been at the maximum experience rate for two consecutive years, a surcharge of one-quarter percent is added to the rate. In the event that an employer remains at the maximum rate for a third or subsequent year, an additional surcharge of one-quarter percent shall be added each year to the annual rate calculation up to one percent. If an employer continues to remain at the maximum rate, an additional surcharge of one-half percent shall be added. In no case shall the surcharge exceed one and one-half percent in any given year.
Contribution Rate Adjustment (CRA)
A contribution rate adjustment is a percentage increase or decrease to the tax rate that is based on the average cash balance of the Unemployment Trust Fund. Rates may be increased by 10 percent, 20 percent or 30 percent, or reduced by 7 percent or 12 percent.
Employers that are eligible for a tax rate calculation have the option to submit a voluntary payment to reduce their UI tax rate for the purpose of lowering their UI tax due for the year. This information is available on UInteract. The deadline for making a voluntary payment is January 15th of the year which the payment will affect. If January 15th falls on a Saturday, Sunday, or holiday, the deadline then would be the following business day.
In addition to state unemployment tax, the Federal Unemployment Tax Act (FUTA). It is reported on the IRS Form 940 or Schedule H and is on the first $7,000 paid to each employee (visit www.irs.gov). The FUTA tax rate is 6.0 percent. When the United States Department of Labor certifies that the state's unemployment compensation program meets federal requirements, employers that pay their state unemployment tax on time and in full receive a 5.4 percent credit to be applied against their FUTA tax rate. This means the effective federal tax rate is 0.6 percent. The revenue from this tax is used to operate state unemployment programs and give loans to states for payment of benefits when needed.
Missouri is currently not a credit reduction state.
Employers covered by the state’s approved UI program are required to pay 6.0% on wages up to $7,000 per worker per year to the Federal UI program. The Federal Unemployment Tax Act (FUTA) grants a credit up to 5.4% to employers who pay their state UI tax timely.
FUTA law requires the state to borrow funds from the federal government if the State Unemployment Trust Fund balance is low to ensure UI claims are paid. A credit reduction occurs when a state has an unpaid loan balance through January 1st for two consecutive years. To guarantee the loan repayment, the federal government will recover the funds by reducing the employer’s FUTA credit by 0.3% each year until the loan is repaid.
For example: Federal UI has a base rate of 6%. If an employer pays state taxes timely, the 6% rate will be reduced by 5.4% and the employer will pay their federal UI tax at a rate of .6%.
If the state has an outstanding loan for 2 years and is unable to pay back the loan in full by November 10th of the second year, the 6% rate will be reduced by only 5.1%, changing the percentage an employer will pay their federal UI tax to .9%. The following year if the loan is still not paid in full, the credit will reduce to 4.8%, and the employer will pay their federal UI tax at a rate of 1.2%. This .3% reduction in FUTA credit will continue each year until the loan is paid off.
Federal Interest Assessment
Interest is charged on the outstanding loan that Missouri received from the federal government to pay unemployment benefits. By law, employers pay the interest due on this loan. The amount of each employer’s share of the interest is based on their taxable payroll for the previous calendar year. This amount is shown on Item 8 (Federal Interest Assessment) of the second quarter Contribution and Wage Report provided by the Division of Employment Security. Payment is due by July 31. As stated above, Missouri has paid off the Federal loan.
A Federal Interest Assessment is not expected to be necessary for calendar year 2023.
State Unemployment Tax Act (SUTA) dumping refers to attempts by employers to pay lower state unemployment taxes than their experience rate allows. SUTA dumping practices include shifting payroll from an account with a higher rate to an account with a lower rate and various restructuring schemes to obtain beginning or lower tax rates. The Missouri Employment Security Law bans these practices by mandating transfers of experience rate in certain situations and prohibiting transfers of experience rate in others. In addition, the law also requires the DES to impose substantial penalties on those who knowingly engage in SUTA dumping activities.
If an individual, organization or employing unit knowingly violates or attempts to violate the Employment Security Law related to determining the assignment of a contribution rate, or knowingly advises another in a manner that results in a violation of such provision, the individual, organization, or employing unit shall be subject to the following penalties:
- If an employer, then for the current year and the three rate years immediately following the current rate year, such employer’s base rate shall be the maximum base rate applicable to such type of employer, or the employer’s current base rate plus two percent, whichever is greater;
- If not an employer, such individual, organization, or employing unit shall be subject to a civil monetary penalty of not more than $5,000.
In addition, any violator may be prosecuted for fraud.
Taxable Wage Base
The taxable wage base is the maximum amount of an employee’s gross wages that can be taxed in a calendar year. The employer is required to pay UI tax for each employee, based on the assigned taxable wage base for that calendar year.
The taxable wage base can be increased by $1,000 or decreased by $500 for any year, depending on the average balance of the Unemployment Compensation Trust Fund of the four preceding calendar quarters. In no event shall the state taxable wage base increase beyond $13,000, or decrease to less than $7,000. See Section 288.036(2) RSMo.
|Calendar Year||Taxable Wage Limitations|