Reemployment tax increase coming to Florida businesses in 2021

Businesses already hurting from the pandemic will take another hit next year. The tax they pay tied to the unemployment system is going up.

“It’s been a tough year already with coronavirus, but we have to do we have to do,” said Chris Blauvelt, the owner of The Standard restaurant in downtown Fort Myers.

Blauvelt says it’s another hurdle he’s willing to jump.

“We have to pay our taxes, and we have to support our community,” Blauvelt said. “That’s all part of it.”

Florida Department of Revenue calculates, next year, businesses will need to pay more toward unemployment insurance, partly because of how many people collected unemployment this year.

In 2020, a business paying the minimum reemployment tax rate paid $7 per employee over the year.

In 2021, that same business will pay $20.30 per employee.

For example, if a business has 100 employees, that’s an extra $1,300 in taxes next year.

Businesses that have laid off any employees in the last three years will see even higher rates.

“It’s going to be significant for some employers that haven’t planned,” said Carolyn Johnson, Director of Business, Economic Development & Innovation Policy at the Florida Chamber of Commerce. “Employers are already hurting due to the pandemic and having to shut down or having to reduce business during COVID.”

Johnson says, during the Great Recession between 2007 and 2009, the minimum tax rate went from $8 to more than $100 per employee.

“So in comparison, a $13 increase is not as bad as previous years, but definitely something that will impact employers in the form of additional costs,” Johnson said.

Add in the fact that the minimum wage is going up, and Johnson says these costs could get passed on to consumers.

“With the increase in wages and the increase in unemployment rates, there’s going to be a cost in the form of goods and services coming up,” Johnson said.

Florida Chamber of Commerce says it’s working with its members now to see just how significant the impact will be. It plans to push the legislature for certain tax breaks, grants and liability protection to offset the increase.

With 22 employees, Blauvelt says this won’t impact his hiring, but he’ll keep a close eye on his budget.

“You gotta really watch all your costs now, just have to be — run a tight ship,” Blauvelt said.

From the Florida Chamber of Commerce:

“The Department of Revenue has released to the Florida Chamber the Reemployment Tax Rate (formally known as unemployment tax) for employers beginning January 1, 2021.

“Florida job creators will see an almost 200% increase in unemployment costs, as employers that are at the minimum rate for unemployment will see a tax increase of $13.30 per employee and will now pay $20.30 per employee in 2021 compared to $7 an employee in 2020. Other employers with variable rates will also see increases in 2021 unless they are at the maximum rate of 5.4 percent.

“The minimum rate will increase from 0.10 percent to 0.29 percent due to socialized costs, such as the non-charge ratio and a fund size adjustment ratio to replenish the trust fund. The maximum rate, set in statute, remains at 5.4 percent. The taxable wage base remains at $7,000 for the year 2021.”

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