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Parnell's Legislation Leads to Lower UI Taxes

Press Release

Location: Juneau, AK

Governor Sean Parnell today announced Alaskans will soon see a 22 percent reduction in unemployment insurance (UI) tax rates, a savings of $89 million. The reduction comes just months after the passage of the governor's bill updating Alaska's unemployment insurance system, allowing for suspension of increases when the Alaska UI Trust Fund is deemed solvent and removing limitations on decreases.

"Alaskans are now able to keep more of their hard-earned dollars," Governor Parnell said. "The tax cut also reflects a strong economy with fewer unemployment claims, which is great news for Alaska."

The average combined UI tax rate for calendar year 2014 is 2.59 percent compared to 2013's 3.32 percent.

Alaska workers pay 27 percent of the average benefit costs, and employers pay 73 percent. For 2014, employers will pay an average of 1.97 percent up to the taxable wage base of $37,400, a decrease from 2013's 2.64 percent. Workers will pay 0.62 percent, down from 0.68 percent.

Alaska continues to maintain a strong trust fund balance, which was $329,488,708 on September 30. Unlike Alaska, 36 states have borrowed from the federal government to keep their unemployment trust funds solvent, and about a dozen continue to do so.

"Alaska's UI system meets all federal requirements, which means Alaska employers also receive a 5.4 percent offset to the 6 percent Federal Unemployment Tax Act," Labor and Workforce Development Commissioner Dianne Blumer said. "This saves Alaska employers up to an additional $378 for each employee."

The Alaska Department of Labor and Workforce Development will begin mailing rate notices to Alaska employers this week.

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