Unemployment insurance tax rates for 86.3% of S.C. employers will remain unchanged or decrease for 2021, and there will be no flat rate tax increases for employers, the S.C. Department of Employment and Workforce announced today.
The agency credited the S.C. General Assembly’s approval of $920 million in pandemic relief to freeze 2021 taxes and replenish the state’s Unemployment Insurance Trust Fund.
“We anticipate saving South Carolina employers an estimated $172.4 million in UI taxes in 2021, significantly reducing the impact of the pandemic on employers,” Dan Ellzey, DEW executive director, said in a release from the agency. “This keeps money in the pocket of businesses as they look for additional ways to rebuild, re-open and continue to re-hire.”
From 2019 to 2020, S.C. businesses saw an average reduction of around 34% in unemployment tax rates.
Normally, employers’ tax brackets are based on their use of the UI Trust Fund, with businesses incurring more taxes for more layoffs, but in March, DEW announced that employers would not be penalized financially for any COVID-19 related job losses.
Without CARES Act funding, the fund would have faced a rebuild of approximately $885 million between 2022 and 2025, DEW said. Because of the additional resources, current projections show an expected rebuild of between $6.1 and $73.6 million during the next four years, the agency said.
Individual businesses may still move between tax classes based on unemployment claim activity prior or unrelated to the pandemic. Tax rate notices will be mailed to businesses on Friday and are currently available online in employers’ State Unemployment Insurance Tax System accounts (.pdf). Tax rates for 2021 are also available online.
South Carolina borrowed nearly $1 billion from the federal government from 2008-2011 during the Great Recession to provide unemployment benefits. That loan was paid off early in 2015, the same year the Legislature required DEW to rebuild the trust fund within five years to a level that would cover benefits needs of a typical recession cycle.
The fund became solvent last November.
“South Carolina is fortunate to have understood the importance of fiscal responsibility while we enjoyed the greatest economy in our state’s history,” S.C. Gov. Henry McMaster said in the release. “Nobody could have predicted the pandemic’s impact on our nation and state, but because of our collaboration with DEW leadership and members of the General Assembly, we were able to have confidence that our state’s unemployment system was financially prepared.”