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The basics:

• NJ businesses to save $300M with lower UI tax rates
• UI Trust Fund rebounds after COVID-19 depletion
• Beginning July 1, employers move from ‘Column D’ to ‘Column C’ tax rates

The state Department of Labor & Workforce Development announced that, because of higher-than-expected unemployment contributions, employers will pay a lower unemployment insurance tax rate, beginning July 1.

This development will save New Jersey businesses an estimated $300 million.

“The unemployment insurance tax reduction demonstrates a major milestone in New Jersey’s economic recovery following the COVID-19 pandemic,” said Gov. Phil Murphy. “We are now able to ease employers’ burdens while continuing to strengthen our workforce. This progress reflects our ongoing commitment to create a robust economy that supports our employees.”

Key things to know:

• Beginning July 1, NJ employers will pay UI taxes under “Column C” (0.5%-5.8%) versus “Column D” (0.6%-6.4%)
• The UI tax system automatically adjusts based on fund health and employer-specific claims history
• Tax tables are set in statute by the New Jersey Unemployment Compensation Law. They automatically update each fiscal year based on the fund’s status
• Reflects the recovery of the UI Trust Fund. The fund was depleted during the COVID-19 pandemic. At that time, NJDOL delivered nearly $40 billion in benefits to 1.6 million workers over 21 months
• Officials attribute this development to the support of hundreds of thousands of New Jersey employers who
  • Comply with state laws
  • Properly classify their employees
  • Make the appropriate contributions to the fund
• Murphy administration has combatted employee misclassification to safeguard the UI Trust Fund

“This is significant news for both the state and its employers and highlights the strength and resilience of New Jersey’s economy,” said Labor Commissioner Robert Asaro-Angelo. “The reduction in employer contribution rates underscores our state’s forward momentum and commitment to fostering job creation and economic growth.”

‘A financial boost’

Legislative leaders and lawmakers applauded the news.

“This will deliver a financial boost to New Jersey’s businesses at a time when they are facing economic challenges from multiple fronts,” said Senate President Nick Scutari, D-22nd District. “Reducing the unemployment tax rate for employers will give them more resources to operate profitably, keep their workers on the payroll and continue to contribute to the state’s economy.”

Assembly Speaker Craig Coughlin, D-19th District, said the improved health of the UI Trust Fund in New Jersey – and this accompanying reduction in payroll taxes – is welcome news. He added it is a testament to the steady recovery built since the pandemic.

“At the height of COVID-19, it was clear that a sharp increase in unemployment costs could hit small businesses hard and slow our progress – but thanks to the steps we took early on, we were able to soften that impact and give employers and workers the room they needed to recover,” said Coughlin. “Today’s announcement of nearly $300 million in taxpayer savings is the result of those fiscally responsible decisions and showcases the strength and resiliency of New Jersey’s workforce and economy.”

New Jersey Chamber of Commerce President and CEO Tom Bracken said this reduction in UI tax rate is welcome news.

“The estimated $300 million in savings will give many businesses a critical opportunity to reinvest in their operations, support their workforce, and strengthen their communities,” said Bracken. “At a time of continued economic uncertainty, this relief couldn’t come at a better moment for employers who are already facing significant financial pressures.”

More information on employer contribution rates are available here.