Employment Law -- Employee
How Are Tax Rates Determined?
North Carolina Unemployment Insurance tax rates are determined under an experience rating system. Employers subject to North Carolina unemployment tax pay quarterly tax on a percentage of their payroll. Most newly liable employers will use the standard beginning tax rate. For 2003, the taxable wage base is $15,900 and the standard beginning tax rate is 1.200% After approximately two years, an employer`s tax rate is determined annually based on experience. Experience rating is affected by payroll, tax paid, timeliness of payments and UI benefits charged against the employer`s account. Based on economic conditions, an employer`s tax rate could be as low as .00% and as high as 5.7%. In November of each year, active employers will be mailed Form NCUI 104, Unemployment Tax Rate Assignment, showing the calculation of the tax rate for the succeeding calendar year. The system allows an employer to make a voluntary contribution to reduce the tax rate. Voluntary contributions must be made within 30 days following the date Form NCUI 104 was mailed.