On October 19th, Governor Chris Sununu announced that payroll taxes will be cut 30% for NH businesses as a response to New Hampshire’s strong unemployment trust fund.
Despite an unprecedented surge in benefit payments provided during 2020 and 2021, New Hampshire’s unemployment trust fund is above pre-pandemic levels and is now back over $300 million. The fund is set to finish the 3rd quarter with sufficient balances to trigger a 30% tax rate reduction for the average New Hampshire business. The tax rate reduction is triggered by state law when the fund maintains a balance of $250 million or more for an entire calendar quarter.
“It is no accident New Hampshire has experienced an explosion in businesses calling the state home since the pandemic,” said Governor Chris Sununu. “We have established a track record of showing that we can lower taxes while maintaining a solvent, dependable unemployment fund. We are making New Hampshire an even more attractive destination while lowering the costs of doing business so that businesses can choose how to invest those dollars. When you combine these tax cuts with our new voluntary paid family leave program, it’s clear New Hampshire is the envy of the nation.”
The unemployment fund is a dedicated account completely funded by New Hampshire employers. The sole purpose of the fund is to pay unemployment benefits to qualifying workers. Businesses pay into the fund on a quarterly basis based upon payroll, at a rate determined by their prior experiences both in terms of unemployment benefits being paid to former employees together with prior taxes paid into the system.
The fund provides partial wage replacement for up to 26 weeks for individuals that were previously employed but lost their employment through no fault of their own. While the maximum duration an individual worker can receive benefits in a single benefit year is 26 weeks, currently the average duration is 10 weeks with only 9% of people filing using all 26 weeks available to them.
Underscoring the importance of the unemployment fund to the New Hampshire state and local economy, New Hampshire Employment Security Commissioner George Copadis stated, “While the department paid out over $2 billion in unemployment benefits to over 175,000 Granite State workers during the pandemic and the majority of those dollars came from the federal government, over $300 million came from the state unemployment fund paid by New Hampshire employers. As the balance in the fund exceeds pre-pandemic levels, we are lowering the cost to New Hampshire businesses giving them the flexibility to choose how best to continue to compete regionally and nationally.”