Governor John Lynch today announced a cut in the unemployment insurance tax paid by 40,000 New Hampshire employers. The reduction applies to taxable wages paid to employees during the fourth quarter of 2012, which began on October 1.
This .5 percent reduction will be the first of two reductions in the unemployment insurance tax. A second reduction is expected go into effect January 1.
"This is good news for New Hampshire businesses, and I am very pleased that we are able to provide this tax cut for employers across the state. We made a promise to businesses that we would cut this tax once the unemployment trust regained its strength and we are keeping that promise," Governor Lynch said. "The recent recession marked the most difficult economic time the state has faced since the Great Depression. Through our careful management of the unemployment trust fund, we were able to ensure the fund was able to meet the needs of New Hampshire families at a time when they needed it most."
Due to the national recession and the greater number of unemployment claims that resulted from it, the balance of the unemployment trust fund dropped significantly, putting the fund at the risk of insolvency. In accordance with state law, a .5 percent emergency surcharge was added in 2009 to help increase the fund balance. A second .5 percent surcharge was added in 2010 as the effects of the recession continued to impact the state and the nation. The law gives the commissioner of Employment Security the discretion to add or remove the surcharge based on the balance of the trust fund.
The Advisory Council on Unemployment Compensation, which includes representatives from the state's business community, supported the addition of the surcharge.
"The New Hampshire business community supported these surcharges because they recognized the importance of keeping the trust fund viable. Our management has strengthened the fund and is allowing us to take these important steps for our businesses," said Employment Security Commissioner George Copadis.
The average New Hampshire employer pays 3.5 percent in unemployment compensation tax on the first $14,000 in wages per employee. Currently, that amounts to $490 per employee. Each .5 percent reduction will provide the average New Hampshire employer with a savings of $70 - or 14 percent cut in tax - per employee, according to Employment Security.