Gov. Noem Signs Unemployment Insurance Tax Cut
PIERRE, S.D. – Today, Governor Kristi Noem signed HB 1011, which cuts unemployment insurance employer contributions by 0.5%, delivering an $18 million tax cut for South Dakota businesses.
“South Dakota’s economy is booming, our unemployment rate is the lowest in our history, and our people are choosing to work,” said Governor Noem. “So many new businesses are choosing to call our state home, and our existing businesses are thriving, so our unemployment reserves are stronger than ever. It’s time to put money back in the pockets of hardworking South Dakota business owners.”
The Department of Labor and Regulation and the Reemployment Assistance Advisory Council drafted legislation in 2016 using an average high-cost multiplier (AHCM) to assess the solvency of the Unemployment Insurance Trust Fund.
An AHCM of 1.0 means enough funds exist to cover a full year of benefits during a recession. Since then, employer tax rates have been based on the AHCM of the fund at the end of each fiscal year.
HB 1011 creates a new tax schedule to reduce employer contribution rates by 0.5% when the balance in the Trust Fund at the end of the fiscal year is at or above an AHCM of 1.5.
Additionally, the bill adjusts the trigger point for a surcharge – this is an additional tax imposed when the balance of the fund drops below $11 million. The surcharge trigger will no longer be tied to a dollar amount, but to an AHCM ratio.
This is the first bill Governor Noem has signed into law in the 2023 legislative session.
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