| 2011 Employer Payroll Tax Rates |
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| Rates to Change in January 2011 |
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Many Oregonians have been out of work due to the recent recession. Like all states, Oregon has a system to pay unemployment insurance benefits to those out of work through no fault of their own.
Unemployment Insurance benefit payments for all programs totaled more than $47 million for the last week in October. That represents nearly 150,000 individual payments in that one week alone! At the beginning of the recession, Oregon maintained over $2 Billion in the Unemployment Insurance Trust Fund, which pays for state benefits. A year ago, the October 2009 fund was just over $1.2 billion. By the end of October 2010, the balance had fallen to under $895 million.
What is the source of the trust fund money? Oregon employers pay a percentage of the payroll for each employee into state and federal trust funds. The money is used for unemployment benefits – no money comes out of the employees paychecks. Employers are assessed a tax rate based how new their business is, how many of its employees have had to draw benefits from the fund, and the overall state tax schedule.
There are 8 tax schedules for Oregon – part of legislation passed in the 1970s. Schedule I collects the least money, while Schedule VIII collects the most. To see what schedules have been in place for the years between 1980 and 2011, click here.
The schedules are set by very specific formula contained in Oregon law (ORS 657.459). Essentially, the formula is designed to keep the fund solvent – having enough money in it to keep from having to borrow money to pay benefits. To review a detailed explanation of this calculation, click here.
For 2011 the formula calls for Oregon to go from Schedule VI to Schedule VIII. What does that mean to the average employer? Here’s an example:
For 2010, the average tax rate is 2.76% and the taxable wage base is $32,100. This means the average amount of tax per employee who earns the taxable wage base or higher in 2010 is $886. In 2011, the average tax rate moves to 3.08% with a taxable wage base of $32,300. The average amount of tax per employee will be $995. In other words, it is an increase of $109.00 per employee for the year. An individual employer’s rate will be different; these are just averages.
Currently, there are over 107,000 taxpaying employers in Oregon. Each was mailed their own tax rate notice in the mail from the Employment Department.
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