Gov. Henry McMaster and S.C. Department of Employment and Workforce Executive Director Dan Ellzey Announce Tax Rate Cuts as the UI Trust Fund Remains Strong
COLUMBIA, SC (STL.News) Governor Henry McMaster and S.C. Department of Employment and Workforce (DEW) Executive Director Dan Ellzey today announced South Carolina’s unemployment insurance tax rates for employers will decrease or remain unchanged for 2022.
In 2020, upon the recommendation of Governor McMaster and Executive Director Ellzey, the General Assembly invested CARES Act funding in replenishing South Carolina’s Unemployment Insurance (UI) Trust Fund. This decision has saved South Carolina businesses millions in taxes and has allowed South Carolina to avoid federal loan repayment and interest.
“While other states had to take out millions of dollars in loans to cover the cost of unemployment, South Carolina took a fiscally responsible approach that is now paying dividends in lower taxes for our businesses and zero debt to repay,” said Governor Henry McMaster. “Today’s announcement will save South Carolina’s businesses millions of dollars, allowing them to reinvest into our state and create even more jobs for our people.”
With a balance of approximately $1.19 billion, South Carolina will:
- Set tax year 2022 rates to raise approximately the same level of revenue as 2020 and 2021.
- Rates will either be lower than the prior two years or remain the same.
- No tax rate class will experience an increased tax rate for 2022.
- Not require any solvency surcharge due to the sufficiently high trust fund balance.
- Maintain a balance that ensures the state could withstand another economic contraction.
“We are excited to announce stable tax rates for the second year in a row coming out of one of the most challenging economic times in recent history,” said S.C. Department of Employment and Workforce Executive Director Dan Ellzey. “Currently, eleven states have outstanding loan balances and five are still actively borrowing federal funds. California is currently accruing approximately $37 million in interest per month on the debt they owe to the federal government. Without the wise investment of CARES Act funds, South Carolina may have had to rebuild around $836 million between 2022 and 2025.”
“We are committed to helping employers and claimants. This is just one way we are able to do that. We are also focused on supporting a thriving workforce, by encouraging businesses and citizens to reach out to us regarding employment opportunities,” continued Ellzey. “We are entering into partnerships with businesses to develop specific plans for them to obtain job applicants for their open positions. We will work with any business, regardless of how large or how small.”
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.
An employers’ tax bracket is based on their usage of the Unemployment Insurance program. The more layoffs they have, the more taxes they typically pay. Although tax rates for each tax class are the same or slightly lower than their 2021 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 Friday, November 12, but employers can log into their State Unemployment Insurance Tax System (SUITS) account beginning Friday, November 5, to see their 2022 tax rate. A guide showing how to access this rate can be found here.
Click here to view the 2022 tax rate chart.