Delaware HB 433 Change Notification
This measure revises the experience rating methodology for assigning unemployment assessment rates to employers under the Unemployment Insurance Code. Under this measure, the unemployment assessment rate for an employer will be calculated by combining a benefit ratio assessment, an employer size add-on, and an employer industry add-on. This measure also reduces new employer unemployment assessment rates and phases in a permanent taxable wage base over three years, beginning in 2025.
Effective Date
Upon enactment for certain components but not until 2027 for the new tax rate calculation.
Delaware House Bill 433 Implication to Stakeholders
The rate calculation will change from a Benefit Wage calculation to a Benefit Ratio calculation. It is meant to be more responsive to changes in the economy over time. There are 19 other states that use the Benefit Ratio calculation. The new methodology is meant to be more responsive to changes in the economy over time, to better sustain the solvency of the Unemployment Trust Fund, and to be easier to administer.
The unemployment assessment rate for an employer under this new methodology would be calculated by combining a benefit ratio assessment, an employer size add-on, and an employer industry add-on. The supplemental tax for operations and technology costs that is already included in the Unemployment Code would continue to be added to each employer’s overall assessment rate.
This bill also reduces new employer unemployment assessment rates and phases in a permanent taxable wage base over three years- $12,500 for calendar year 2025, $14,500 for calendar year 2026, and $16,500 for calendar year 2027 and thereafter. The new methodology would be in effect beginning calendar year 2027.
Until the effective date of that new tax rate structure, this Act would also provide temporary relief to employers who pay unemployment tax assessments in calendar year 2025 and 2026 by reducing new employer tax rates, simplifying tax rate schedules, reducing or holding constant overall employer tax rates, and reducing the maximum earned rate. This Act also makes technical corrections to existing Code to conform to the Legislative Drafting Manual and reinserts a historical provision that applied only to 2023.
Recommended Action
There is nothing recommended for 2025 or 2026 but when the new rate calculation method begins in 2027, an in-depth audit of the tax rate should take place to confirm the figures used are accurate. Clients of Experian Employer Services with active state unemployment insurance account numbers in the state of Delaware can be assured we will audit your tax rates and question any incorrect figures there in.
