New employers are assigned a benefit ratio based on the two year average benefit ratio of all employers in their respective industry. The average benefit ratio is used to determine the overall rate for a new employer. New out-of-state contractors are assigned the maximum tax rate (7.3%) allowable under state law unless they purchase an existing business.
New employer rates are assigned upon completion of the New Employer Registration process. If you register on-line, the tax rate assigned will become effective after it has been reviewed by the department. If you mail or fax the registration form, you will receive a notice of your new employer tax rate in the mail.
New employers may qualify for a rate based on their actual benefit ratio after they have paid wages for a period of one fiscal year (July 1 through June 30) prior to the rate computation date.
Your overall contribution rate will be calculated annually using the following three components:
Benefit Ratio - determined by dividing the total of all chargeable benefits paid to your former employees in the last four fiscal years (July 1 - June 30) by your taxable wages for the same time period. The benefit ratio portion of the overall tax rate is unique to each employer.
Reserve Factor - adjustment to the benefit ratio (an increase or decrease) used to maintain an adequate balance in the benefit reserve fund. For 2024, the reserve factor is 1.10, meaning the reserve fund is less than an adequate level.
Social Cost - applied to all employers to recover benefit costs that cannot be attributed to a specific employer. Social Costs will vary year to year and is "fixed" at that year’s percentage for all employers. For calendar year 2024, the social cost is fixed at .003 for all employers.
To calculate your overall tax rate, the following formula is used:
Benefit Ratio X Reserve Factor + Social Cost
In addition, a 1% surcharge will be added to the overall tax rate if the employer or the previous owner of the business has unpaid contributions for the prior fiscal year (July 1 - June 30).
For 2024, the minimum overall tax rate is .3% and the maximum overall tax rate is 7.3%. Employers who have not paid all contributions for the fiscal year ending June 30th may be assessed a delinquent payment surcharge of 1.0%, which is in addition to the overall tax rate.
During 2024, the taxable wage base is $47,000.00. Utah employers are only liable for state UI taxes on wages paid to each employee up to the taxable wage base. All wages paid to each employee above the base are considered Excess Wages and are still reported but not taxed.
Utah's ''benefit ratio" system for calculating unemployment insurance tax rates allows you the opportunity to manage your unemployment tax costs. For specific recommendations from the Department on managing these costs, please check out Controlling Unemployment Tax Costs.