Update March 1: The House of Representatives has passed SB 5873 unanimously.
OLYMPIA — Washington businesses would see $214 million in unemployment insurance tax relief this year, with no use of state funds, under a bill passed by the Senate today.
Unemployment insurance (UI) premiums have spiked due to surging demand during the pandemic.
“The layoffs due to COVID-19 hit small businesses especially hard,” said Sen. Karen Keiser (D-Des Moines), the bill’s sponsor. “This bill will keep unemployment insurance premiums for all employers, and especially for small businesses, from going up as much as they otherwise would have.”
SB 5873 would cut UI premiums for all employers in the state this year. It does that by decreasing the “social insurance” portion of the tax, which falls disproportionately on small businesses. In 2023 the bill would provide additional relief to small businesses—the 61% of Washington employers with 10 or fewer employees.
In 2021, the Legislature put $2.2 billion in UI tax cuts back into the pockets of Washington’s employers through SB 5061 and SB 5478, both sponsored by Keiser. Those bills provided significant relief while also rebuilding the state’s UI trust fund, one of the strongest in the nation.
Due to strong UI trust fund growth, no state general funds need be used for this year’s tax relief. SB 5873 is projected to drop the average UI tax rate in 2022 from 1.45% to 1.30% while only modestly reducing the ending trust fund balance in 2022 from 4.9 months of benefits to 4.6 months of benefits.
SB 5873 now goes to the House of Representatives for consideration.
