Gov. Henry McMaster and S.C. Department of Employment and Workforce (DEW) Executive Director Dan Ellzey announced that South Carolina’s unemployment insurance (UI) tax rates will decrease or remain the same for all employers in 2023.
This is the 10th year in a row that the agency, the General Assembly, and the governor’s office have been able to maintain or lower UI business tax.
“Today’s announcement will save South Carolina’s businesses millions of dollars, allowing them to create new jobs for people and invest more in their companies and communities,” McMaster said.
With a balance of approximately $1.4 billion, South Carolina will:
* Set tax year 2023 rates to raise approximately the same level of revenue as 2022 and 2021. Rates will either be the same or lower than in the prior three years. No tax rate class will experience an increased tax rate for 2023.
*Rates will be lower for rate classes 2-19 by an average of 15.5 percent compared to 2022 levels.
*Not require any solvency surcharge due to the sufficiently high trust fund balance.
*Maintain a balance that ensures the state can withstand a moderate economic contraction.
Each year, state officials estimate the unemployment benefits that will be paid in the following year and set the tax rate to ensure that the trust fund has the revenue to make the payments.
The process to determine the tax rates involves an extensive analysis of the economy, the current level of the UI Trust Fund, expected unemployment, estimated benefits that will have to be paid, and revenues that will need to be generated to pay such benefits.
During the Great Recession, South Carolina borrowed nearly $1 billion from the federal government in order to continue to provide unemployment benefits. The agency was able to pay off the loan early, saving businesses roughly $12 million in interest.
After the loan was paid off in 2015, the Legislature passed new regulations requiring DEW to rebuild the trust fund within five years to a level that would cover potential benefit needs of a typical recession cycle without borrowing from the federal government. The agency completed the rebuild effort in 2019.
Although most pandemic unemployment benefits were paid through federal programs such as Federal Pandemic Unemployment Compensation (FPUC), the trust fund balances of states were also depleted as UI payments were dispersed.
Twenty-three states borrowed money from the federal government to help support UI benefits when claims rose exponentially across the nation, but South Carolina was not one of them.
In South Carolina, $836.4 million of Coronavirus Aid, Relief, and Economic Security (CARES) Act money was applied to the balance of the state’s Trust Fund. That allowed the state’s businesses to recover faster from the pandemic and shift efforts from unemployment to reemployment, state officials said.
Although tax rates for most tax classes are lower than their 2022 levels, individual businesses may still move between classes based on their unemployment claim activity.
All businesses with charges against their accounts are provided a “charge statement” quarterly to review and have 30 days to protest any charges that they do not believe should be on their account.
Tax rate notices will be mailed to businesses on Thursday, Nov. 10, but employers can log into their State Unemployment Insurance Tax System (SUITS) account beginning Monday, Nov. 7, to see their 2023 tax rate.
Click here to view the 2023 tax rate chart.