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Gov. Hogan announces allocation of American Rescue Plan Act as unemployment insurance tax rates increase for business owners

Posted at 5:10 PM, Mar 31, 2021
and last updated 2021-04-01 09:47:45-04

ANNAPOLIS, Md. — On Wednesday Maryland Governor Larry Hogan and leaders of the General Assembly reached an agreement on how to allocate the money coming to the state from the American Rescue Plan Act. This comes as many small businesses are realizing they'll have to pay more in unemployment insurance tax rates.

"With today’s announcement, Maryland has once again shown the nation that people from different parties can still come together, that we can put the people’s priorities first, and that we can deliver real, bipartisan, common-sense solutions to the serious problems that face us,” said Gov. Hogan. "This is about connecting businesses, schools, and families to the world,” said Senate President Bill Ferguson. “What this represents is an investment in the post-pandemic economy, where we use these recovery dollars with the lessons that we have learned over the last year to build back stronger and be more competitive.”

As for UI tax rates, according to the Department of Labor, the range of tax rates for contributory employers in 2021 will be between 2.2% to 13.5%. A spokesperson with the Department of Labor says had Governor Hogan not issued an executive order, these new tax rate increase would have been much higher.

The rate for new employers will be 2.3%. Under Maryland UI law, there is a separate rate for new employers that are in the construction industry and headquartered in another state, which will be 7.0% in 2021.

"Those kinds of changes can be catastrophic to small businesses," said Samantha Claassen, owner of Golden West Cafe.

Classeen told WMAR-2 News she received notification from her payroll company that her UI tax rate was going from .6% to 3.1%.

"My previous understanding with the Hogan's Executive Order was that there wasn’t going to be an increase," said Claassen. "We thought these layoffs and furloughs that happen due to COVID we’re not going we’re not going impact our UI number."

WMAR reached out to the Department of Labor for clarification.

A spokesperson said, "Governor Hogan signed an Executive Order that prevents Maryland’s contributory employers from having their experience rating negatively impacted because they had to lay off or furlough employees due to the economic consequences of the pandemic.

However, the press release also stated that based on the balance of the Trust Fund, Maryland employers will be taxed under Table F in 2021. Due to the change in the applicable Tax Table, all employers will still see an increase in their tax rate for the calendar year 2021. Maintaining the 2020 benefit ratio for employers in 2021 will ultimately reduce employers’ tax rates from what they would have been without the Executive Order.

The department issued the final tax rate notice to all employers on March 1. Employers also received several email blasts from our department. The tax rate notice contains two calculations: (1) one with the Executive Order; (2) the other without the Executive Order. Employers will receive the lower of the two rates. Employers can apply for payment plans through their BEACON portal."

For more information on new 2021 Unemployment Insurance Tax rates and help afforded to businesses click here.