COLUMBIA, S.C. — South Carolina unemployment insurance tax rates for businesses will be an average of 34% lower next year.
Gov. Henry McMaster, S.C. Department of Employment and Workforce Executive Director Dan Ellzey and South Carolina business leaders announced Thursday that the South Carolina 2020 unemployment insurance tax rates for businesses will be an average of 34% lower than 2019.
A business that qualifies for tax rate Class 12, with 100 employees who were paid wages of at least $14,000 per year per worker, would pay nearly $4,500 less in unemployment taxes in 2020 than it paid in 2019.
The tax rate is a formula based on projected benefit costs for the year and the amount that was required to rebuild the trust fund balance by 2020. New businesses qualify for tax rate Class 12.
“Balancing the requirement to maintain a fiscal safety net while cutting business taxes each year shows that South Carolina is dedicated to making it appealing for companies to do business here so they will continue to create jobs and invest in South Carolinians by expanding opportunities,” McMaster said. “The 2020 savings are a direct result of the growing economy and the support of the business community.”
“With more than 2.31 million South Carolinians working and the unemployment rate at 2.9 percent, these cuts are a welcomed incentive for businesses wanting to expand in this vibrant economy,” Ellzey said. “We are here to assist them with their workforce, particularly in rural areas where individuals may need training, skill assessments, transportation and other services to succeed in long-term, dedicated employment.”
All liable South Carolina businesses receive a tax rate based on their use of the system. Tax rate notices will be mailed to more than 120,000 businesses on Friday, but are currently available in an employer’s State Unemployment Insurance Tax System (SUITS) account.
Additionally, the Unemployment Insurance Trust Fund is now at a level sufficient to withstand a recession that is the equivalent of the average of the last three recessions.
During the Great Recession, South Carolina needed to borrow nearly $1 billion from the federal government in order to provide unemployment benefits.
The agency, however, was able to pay off the loan early, saving businesses $12 million.
After the loan was paid off in 2015, the legislature approved a regulation that required the agency to rebuild the trust fund within five years to a level that will cover the potential benefit needs without borrowing from the federal government. The agency has now completed that effort.
The solvency of the trust fund means the elimination of all solvency surcharges, the first time since 2003, including those to repay the 2008-2011 federal loan as well as the five-year rebuild of the state’s trust fund that was depleted during the Great Recession.
“Our agency’s mission is to bolster employment throughout the state, and more South Carolinians are now working than ever before with an unemployment rate that is the lowest in recorded history,” Ellzey said. “The best news for these good times is that the trust fund is now prepared to withstand a recession.“
Ellzey added that it was imperative to the state’s ability to support individuals in the case of an economic downturn to have a strong trust fund, and that his agency is glad to have the resources ready should the citizens of South Carolina need the funds.