The Alabama Department of Labor is making many employers throughout the state very happy.
Recently, the department announced most employers in Alabama will receive a 54% tax cut in their 2023 unemployment insurance taxes and the state has dropped into the lowest tax rate schedule.
Rosemary Elebash, Alabama director of the National Federation of Independent, said the announcement is welcome news for Alabama’s small businesses.
“Small businesses have really struggled financially these past several years because of the pandemic, labor and supply chain issues and inflation,” she said. “This announcement is one more sign that things are turning around. The money Main Street businesses save on unemployment insurance taxes is money they can spend on additional staff and other expenses.”
This is the first time that Alabama has dropped into the lowest tax rate schedule since 1997, the Labor Department said.
“Following the economic uncertainty and the record-breaking amount of unemployment compensation benefits paid out during the pandemic, it is absolutely remarkable that we have been able to lower taxes for employers and drop to the lowest tax rate schedule in this short amount of time,” said Labor Secretary Fitzgerald Washington.
According to the department, no shared costs will be incurred by employers this year. This follows several years of shared cost collections that were related to the pandemic.
The objective of the Alabama Unemployment Tax Schedule that the state has been using prior to the 53% tax cut is to maintain an adequate balance. This is so benefits can be paid when necessary.
Washington also talked about the effect the tax cut will have on Alabama’s economy.
“Lower taxes allow businesses to hire more employees and spur spending,” he said. “This record low tax rate is further evidence of Alabama’s economic recovery and shows how resilient we have been as a state.”
Austen Shipley is a staff writer for Yellowhammer News.