In an effort to improve Connecticut’s Unemployment Insurance (UI) Trust Fund solvency, the legislature passed Public Acts 21-200 and 22-67 to implement reforms that were achieved through a collaborative effort of business and labor. Changes to the tax and benefit system, plus the inclusion of indexing various tax and benefits measures, will promote long term UI Trust Fund solvency; reduce employer costs; build in cost predictability to support employer fiscal planning; and stabilize UI benefit payments to unemployed workers.
If you are a Third-Party Agent (TPA) or a Federal/State Employment Taxes (FSET) vendor, please share this important communication with your client(s).
Under the Public Acts, the following UI Tax changes are effective January 1, 2025:
• The taxable wage base (TWB) increases from $25,000 to $26,100.
• The state’s new employer rate decreases from 2.5% to 2.2%.
• The state’s minimum charged rate is 0.1%.
• The state’s maximum charged rate is 10.0%.
• To minimize the short-term impact of the TWB increase, charged rates in calendar year 2025 will be reduced by 1.269. As such, the state’s maximum charged rate for calendar year 2025 will be reduced to 7.9%.
• The state’s fund solvency tax rate is 1.0%.
• The minimum and maximum contribution rates for 2025 will be 1.1% and 8.9%, respectively.
Examples of Contribution Rate calculation for calendar year 2025:
Employer A is eligible to receive a charged rate, which is calculated based on the amount of UI benefits charged to their account divided by the taxable payroll reported. The employer has the following UI benefit charges and taxable wages and is not eligible for an industry sector benefit ratio adjustment:
• Experience Year 2022: UI Benefit Charges =$500
• Experience Year 2022: Taxable Wages = $10,000
• Experience Year 2023: UI Benefit Charges = $500
• Experience Year 2023: Taxable Wages = $10,000
• Experience Year 2024: UI Benefit Charges = $500
• Experience Year 2024: Taxable Wages = $10,000
• $1,500 / $30,000 = 0.0500 Benefit Ratio
• 0.0500 Benefit Ratio = 5.0% Preliminary Charged Rate
• 5.0% / 1.269 divisor = 4.0% Final Charged Rate (rounded to the next higher one-tenth of one percent)
• 4.0% Final Charged Rate + 1.0% Fund Solvency Tax Rate = 5.0% 2025 Contribution Rate
Employer B is eligible to receive a charged rate, has the following UI benefit charges and taxable wages and is eligible for an industry sector benefit ratio adjustment of 0.006:
• Experience Year 2022: UI Benefit Charges = $2,000
• Experience Year 2022: Taxable Wages = $10,000
• Experience Year 2023: UI Benefit Charges = $2,000
• Experience Year 2023: Taxable Wages = $10,000
• Experience Year 2024: UI Benefit Charges = $2,000
• Experience Year 2024: Taxable Wages = $10,000
• $6,000 / $30,000 = 0.2000 - 0.006 Benefit Ratio Adjustment = 0.1940 Benefit Ratio
• 0.1940 Benefit Ratio = 19.4% Preliminary Charged Rate
• 19.4% is subject to maximum Charged Rate cap of 10.0%
• 10.0% / 1.269 divisor = 7.9% Final Charged Rate (rounded to the next higher one-tenth of one percent)
• 7.9% Final Charged Rate + 1.0% Fund Solvency Tax Rate = 8.9% 2025 Contribution Rate
Under the Public Acts, the UI Benefits changes are effective January 1, 2025:
• Due to indexing, the minimum weekly UI benefit payment will increase from $40 to $42.
• The minimum base period earnings requirement increases from $1600 to $1,680.
• The maximum weekly UI benefit during the four years from October 2024 through October 2028 is frozen and remains $721.
This information is available on our website: Unemployment Insurance Tax
For UI Tax questions, please email the Employer Status Unit at DOL.Status@ct.gov
For UI Benefits questions, please email the Legal Division at DOL.LegalDivision@ct.gov