Connecticut Saves Businesses From Federal Unemployment Tax Increase

By Lawrence Cook

November 21 @ 9:00 am

Connecticut businesses will avoid an increase in federal unemployment taxes next year thanks to the state’s decision to repay all 2024 borrowing under the Unemployment Trust fund ahead of a Nov. 10 deadline, Gov. Ned Lamont’s administration announced Tuesday.

The move is expected to save state businesses $215 million.

This is the second year in a row that Connecticut has set aside money in the state budget to make Trust Fund payments, and the fourth consecutive year that Connecticut businesses will not need to pay special assessment fees in order to cover interest on the loans.

In a press release, Lamont said that stabilizing the fund had been a priority for his administration and had helped to save Connecticut employers millions in federal unemployment taxes and assessments.

“Over the last several years and in partnership with the legislature, we’ve worked to build predictability into the system so employers know what’s ahead and can hire and grow,” Lamont said.

Working with the governor, the Connecticut General Assembly passed Public Act 21-200 in 2021 and Public Act 22-67 in 2022, both of which promote long-term Trust Fund solvency. In 2022 the legislature allocated $195 million that the state received from the federal American Rescue Plan Act and directed it into the Unemployment Trust Fund.

Unemployment benefits are administered by the state Department of Labor and are paid from the Unemployment Trust Fund, which is designed to be fully funded by employers. The state borrows money from the federal government to pay unemployment benefits if the trust fund becomes insolvent. This borrowing is typically repaid by employers through increased taxes or special assessments on the interest associated with the loan.

Labor Commissioner Danté Bartolomeo said that Connecticut had prioritized a strong and growing economy by reducing the financial burden on employers.

“Governor Lamont and the legislature established laws that are now paying off for employers and the people and companies who do business with them,” she said.