Important Updates to Minnesota’s Unemployment Tax Rates for 2025

By Published On: December 19, 2024Categories: Tax News, Services-Accounting Services

Minnesota employers will see changes to state unemployment tax rates in 2025, following adjustments by the Department of Employment and Economic Development (DEED). These changes reflect efforts to maintain the solvency of the Unemployment Insurance (UI) Trust Fund while responding to economic conditions and employer feedback. Here are some key changes you need to know:

2025 Tax Rate Adjustments

  • Base Tax Rate Changes:
    • The base UI tax rates for 2025 will range from 0.4% to 8.9%, depending on the employer’s experience rating.
    • The taxable wage base for 2025 will be $43,000 which is up $1,000 from 2024.
  • Additional Assessment for Trust Fund Solvency:
    • A 5.0% additional assessment will be applied to all employers due to projected shortfalls in the UI Trust Fund. The surcharge is designed to ensure adequate funding for unemployment benefits in 2025.
  • Federal Unemployment Tax (FUTA) Credit Impact:
    • Minnesota remains compliant with federal unemployment insurance funding requirements. Employers will continue to receive the full FUTA credit, keeping their effective federal rate at 0.6% for 2025.

Why Are These Changes Happening?

The adjustments are part of a broader strategy to:

  • Address the increased demand on unemployment resources in recent years.
  • Rebuild the state’s UI Trust Fund after significant withdrawals during the pandemic.
  • Prevent federal borrowing, which can result in higher long-term costs for employers.

What Employers Should Do

  • Review Your 2025 Rate Notice:
    • DEED will issue tax rate notices in late December 2024. Employers should carefully review these notices to confirm their assigned rate and ensure accuracy in payroll systems.
  • Plan for Budget Impacts:
    • Consider the potential increase in unemployment insurance costs when setting your 2025 budgets. Businesses with higher turnover rates may see more significant changes.
  • Explore Workforce Strategies:
    • Reducing layoffs and improving employee retention can help lower your experience rating over time, leading to reduced tax rates in future years.
  • Stay Informed:
    • Attend DEED’s informational webinars or consult with your tax professional at SDK to understand how these changes affect your business.

Additional Resources

For more information, visit the Minnesota Unemployment Insurance Program’s website at www.uimn.org. Here, you can access resources to manage your account, review compliance guidelines, and explore workforce solutions.

By staying proactive and informed, Minnesota employers can effectively navigate these changes and ensure compliance with state requirements in 2025.

If you have questions or concerns about the 2025 unemployment tax rates, you can reach DEED at 1-877-898-9090 or email ui.mn@state.mn.us.