This recession has resulted in massive layoffs for some businesses and some employers are concerned that they will see a huge payroll tax increase when they can least afford it. Despite facing the highest unemployment rate in Oregon’s history, we anticipate Oregon only will move to the middle UI tax schedule – schedule 4 – for 2021. This is thanks to the UI Trust Fund formula which has served Oregon well for the last 45 years. It has kept Oregon solvent, and saved Oregon employers additional costs, through the Great Recession and is on track to remain solvent through the current recession.
While this recession is having a big impact on employers right now, there are two reasons why we anticipate only a modest increase in Oregon’s payroll tax schedule. First, federally funded benefit programs are not being charged to employer accounts. Second, to determine payroll tax rates, the Employment Department reviews three years of UI benefits. That means this current recession covers only eight percent of the total time period that is used to determine your 2021 payroll tax rate.
As of Oct. 22, 2020, 21 states have already borrowed a total of $38.4 billion. The amount of borrowing costs are being passed on to their employers and is expected to continue growing for some time. That will not be the case in Oregon. While employers in other states will see additional UI taxes and other costs, Oregon employers have saved $685 million in payroll taxes over the past decade through the UI Trust Fund’s interest earnings.