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Unemployment tax rate for businesses will drop in 2014

(Radio Iowa) – Iowa businesses will save next year on the amount of money they have to pay in for unemployment benefits. Iowa Workforce Development spokesperson, Kerry Koonce, says they set the rate based on a tax table each year.

“The table moved to a higher number which actually means the rates are lower. There are eight tables possible and it will be moving to table six,” Koonce explains. “Which will save Iowa businesses about $104-million next year in taxes. Which is money they can reinvest in the economy.”

She says the average rate paid by businesses will be 1.6-percent in 2014, down from two-percent this year. Koonce says this is the third straight year the tax amount has dropped — which she says is an indication the economy is improving. “The employers pay this tax based on the salary paid to employees. It goes into the unemployment insurance trust fund, and that’s what pays unemployment benefits to individuals who have lost their job,” Koonce says.

The rate is in place for one year, and Koonce says there shouldn’t be any worry about paying benefits if the unemployment rate should start going back up again. “The formula that’s used by law to calculate that kind of takes that into consideration and requires you to have enough money in the trust fund to pay out at the highest level of benefits that you’ve paid in the last 20 years. Therefore, it’s pretty much securing that you will be covered for anything that happens during the year,” according to Koonce.

Workforce Development information says Iowa has one of the lowest unemployment insurance rates in the country.