| 2010 Employer Payroll Tax Rates |
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| Rates to Change in January 2010 |
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As you are no doubt aware, a lot of Oregonians are out of work due to our current economic downturn. Oregon, like all states, has a system to pay unemployment insurance benefits to those out of work through no fault of their own.
Unemployment Insurance benefit payments total more than $56,000,000 for the last week in October. That represents over 175,000 checks in that week alone! A year ago the Unemployment Insurance Trust Fund, which pays for state benefits, had an over 2 billion dollar balance. As of the end of October the balance stood at just under 1.2 billion.
Where does that money come from? Oregon employers pay a percentage of the payroll for each employee into state and federal trust funds. That’s the money used for unemployment benefits—no money comes out of 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 tax schedule.
There are 8 tax schedules for Oregon—part of a law passed in 1975. Schedule I collects the least money, while Schedule VIII collects the most. To see what schedules have been in place for the years between 1975 and 2010, click here.
The schedules are set by a very specific formula contained in Oregon law (ORS 657.459). For a detailed explanation of the formula and how we arrived at 2010’s rate, click here. 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.
For 2010 the formula calls for Oregon to go from Schedule III to Schedule VI. What does that mean to the average employer? Here’s an example:
In 2009, the average tax rate is 1.97% and the taxable wage base is $31,300. This means the average amount of tax per employee in 2009 is $617. In 2010, the average tax rate is 2.76% and the taxable wage base is $32,100. The average amount of tax per employee will be $886. In other words, an increase of $269.00 per employee per year. Each employer’s rate is different of course, these are just averages.
There are currently just under 110,000 taxpaying employers in Oregon. Each will receive their own tax rate in the mail from the Employment Department.
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