The Oregon Employment Department will assess employers at the same tax schedule in 2012 as in 2011.
Oregon law requires the Employment Department to use a statutory formula to determine employer payroll tax rates for the upcoming year. Based on that formula, Oregon will remain on Schedule 8 in 2012.
Oregon annually adjusts employer tax rates using eight tax schedules based on the solvency of the Unemployment Insurance Trust Fund. Movement between the eight schedules of tax rates represents the self-balancing aspects of Oregon’s Unemployment Insurance Trust Fund law. Each September a formula contained in statute determines how much should be collected during the next year to maintain a solvent fund. Each schedule has a range of tax rates based on an employer’s previous Unemployment Insurance experience. Employers with more Unemployment Insurance claims have a higher tax rate than those with fewer claims.
Since 2008, 36 states depleted their trust funds to the point of needing to borrow money from the federal government to cover unemployment insurance benefit payments. These loans totaled in excess of $80 billion. Due to Oregon’s self-balancing formula, the state’s trust fund has maintained a healthy level despite record unemployment insurance payments.
As of January 2012, Oregon employers will be assessed Unemployment Insurance tax under Tax Schedule 8, which means they will be charged an average rate of 3.08% of the first $33,000 paid to each employee. Tax rates in Schedule 8 range from 2.2% to 5.4%. The specific rate each employer will pay under the new schedule depends on how much they have used the Unemployment Insurance system. The tax rate for new employers will remain at 3.3%.