Tax rates are assigned to all subject employers using the same experience rating formula. The base rate in effect for a given year is determined by the solvency of the Unemployment Insurance Trust Fund.
Important Information for Annual Experience Rating for 2023 Tax Rates
|Taxable Wage Base for 2023||$29,600||Section 96-9.3|
|Base Rate||1.9%||S.L. 311|
|Employer's Reserve Ratio Percentage (ERRP)||Employer's Reserve Ratio Multiplied by 0.68||Section 96-9.2(c)|
|UI Tax Rate for Beginning Employers||1%||Section 96-9.2(b)|
|Minimum UI Tax Rate||0.06%||Section 96-9.2(c)|
|Maximum UI Tax Rate||5.76%||Section 96-9.2(c)|
|Mail Date for Unemployment Tax Rate Assignments For 2022||November 14, 2022|
|Final Date for Voluntary Contribution||December 14, 2022||Section 96-9.2(e)|
|Final Date for Protest||May 1, 2023||Section 96-9.2(d)|
For an employer’s contribution rate to be reduced below the standard rate for any calendar year, its account must be subject to being charged with benefits for at least 12 calendar months ending July 31, or its liability must extend over a period of all or part of two consecutive calendar years.
Employers receive credit for tax payments posted to their account. These credits are used to determine the base rate from which the tax rates for all contributory North Carolina employers are assigned on an annual basis. August 1 is the computation date for employer contribution rates.
What are experience rating accounts?
North Carolina’s UI tax rates are determined under an experience rating system. Once an employer is eligible to receive a reduced tax rate, the tax rate is determined annually based on experience. Experience rating is affected by payroll, tax paid, timeliness of payments and unemployment insurance benefits charged against the employer’s account. Based on economic conditions, an employer’s tax rate could be as low as 0.060% or as high as 5.760%.
Each employer's payroll for the last three fiscal years as of July 31 of the current year is divided into the applicable credit or debit balance to yield a ratio. This ratio is multiplied by 0.68 to yield the Employer's Reserve Ratio Percentage, or ERRP. Refer to the rate formulas below for information to calculate the unemployment insurance tax rate, which does not include the 20% surtax for the Unemployment Insurance Reserve Fund.
|UI Trust Fund Balance as Percentage of Total Insured Wages*||Contribution Rate|
|Less than or equal to 1%||2.9% minus ERRP|
|Greater than 1% but less than or equal to 1.25%||2.4% minus ERRP|
|Greater than 1.25%||1.9% minus ERRP|
*Defined in Section 96-9.2(c) as the totals for all insured employers. The calculated Contribution Rate for any given tax year applies equally to all experience rated employers.
In November of each year, active employers will be mailed an Unemployment Tax Rate Assignment (Form NCUI 104), which shows the calculation of the tax rate for the succeeding calendar year. Experience rating accounts are maintained for rating purposes only. This statement requires no payment, nor can it be used to pay tax due. The tax rate shown on the Unemployment Tax Rate Assignment Form becomes final unless protested in writing prior to May 1 of the following year. Employers may make a voluntary contribution to reduce the tax rate. Voluntary contributions must be made within 30 days following the date that the Unemployment Tax Rate Assignment Form was mailed. Sign in to your account to view your tax rate and benefit charge information and to calculate a voluntary contribution.
Voluntary contributions can be made online or by check. Checks must be identified as voluntary contributions payable to the Division of Employment Security and mailed to:Division of Employment Security
P.O. Box 26504
Raleigh, NC 27611-6504
Note: If a voluntary contribution payment is being made within 30 days of the date on your annual rate notice or within 30 days of the date on a revised rate notice, your payment will be credited to your account and your tax rate adjusted accordingly. Otherwise, the payment will be credited to your account and no adjustment to the corresponding tax rate.
If timely voluntary contributions are made, will another Unemployment Tax Rate Assignment (Form NCUI 104) be sent?
No. A written notice will provide you with confirmation of your new tax rate, but you will not receive another detailed summary of your account. However, the summary you receive the following year will reflect the voluntary contributions you made.
Are all employers treated the same with regard to tax rate assignment?
Tax rates are assigned to all subject employers using the same experience rating formula. The base rate in effect for a given year is determined by the solvency of the Unemployment Insurance Trust Fund as shown above.
The tax rate is affected by payroll, tax paid, timeliness of payments and unemployment insurance benefits charged against the employer’s account, and the base rate in effect for the tax year. These are all factors that can potentially cause an increase in your assigned rate.
A 20% surtax is imposed upon contributions in a calendar year when the amount in the Unemployment Insurance Trust Fund does not equal or exceed $1 billion in accordance with N.C. Gen. Stat. § 96-9.7(b). The rate you are assigned will be the combined or composite rate.
The surtax for the Unemployment Insurance Reserve Fund is not Federal Unemployment Tax Act certified; when the surtax is imposed, the Division of Employment Security will only certify .8333 (83.33%) of the total taxes paid. If the surtax is not imposed, DES will certify 100% of the total taxes paid.
The surtax for the Unemployment Insurance Reserve Fund applies to all employers who are paying unemployment insurance contributions based upon payroll.
You should protest the tax rate in writing prior to May 1 of the calendar year for which the tax rate was assigned.
By Mail:Division of Employment Security
P.O. Box 26504
Raleigh, NC 27611-6504
By Fax: 919-733-1255
A valid protest must be signed by an owner, partner or corporate officer—not a third party. An example of a valid protest is one in which an error has been found in the figures used to calculate the tax rate.