The Alabama Legislature on Thursday approved the appropriation of $772 million in American Rescue Plan Act (ARPA) funding for numerous priorities set forth by Gov. Kay Ivey.
Included in the package was a $79.5 million appropriation to the state’s unemployment insurance trust fund, which has paved the way for a substantial tax cut for most employers.
According to the Alabama Department of Labor (ADOL), the appropriation replenishes unemployment trust fund dollars spent during the peak of the COVID-19 pandemic.
The $79.5 million in replenishment dollars, in conjunction with CARES Act funding added in 2021, served to offset costs incurred during the timeframe of March to October 2020. The department advised that the funding lowered the shared cost rate that is distributed equally to all employers, clearing the path for a decrease in the unemployment insurance tax rate.
ADOL Secretary Fitzgerald Washington on Friday applauded state leadership’s work to ensure that ARPA funds were utilized toward providing tax relief to Alabama employers.
“We are thankful for the support of Governor Ivey and her administration, and to the Alabama Legislature for allocating these funds to help provide needed relief to Alabama’s employers,” stated Washington. “These savings will hopefully allow employers to continue to hire employees and help businesses thrive.”
Had replenishment funds not been provided, the unemployment insurance tax rate was set see a 3% increase for 2022. Due to the addition of federal pandemic relief dollars, the state has dropped into a lower tax schedule.
“We had expected to drop into a lower tax schedule in 2021, but those plans were derailed by the pandemic,” added Washington. “The fact that we were able to correct course and drop into a lower bracket this quickly is great news.”
According to ADOL, unemployment insurance taxes are paid in full by employers on the first $8,000 of wages earned per employee.
Dylan Smith is a staff writer for Yellowhammer News. You can follow him on Twitter @DylanSmithAL
Don’t miss out! Subscribe today to have Alabama’s leading headlines delivered to your inbox.