The New Jersey Assembly Commerce and Economic Development Committee has approved A-3683, a bill that would give tax credits to some small businesses with an aim to offset increasing unemployment insurance taxes following the coronavirus pandemic. The New Jersey Business and Industry Association estimates businesses in the state face about $250 million in additional taxes this fiscal year and will owe an additional $600 million over the next two years.
The solvency of New Jersey’s unemployment trust fund decreased during the coronavirus pandemic. New Jersey uses a formula that triggers automatic unemployment insurance tax increases when the unemployment fund is depleted. The bill aims to reduce that increased tax burden for small employers. If the bill becomes law, companies can receive unemployment tax credits if they meet the U.S. Small Business Administration’s definition of a small business.
The bill would also require the state Department of Labor to provide a 30-day notice to employers before changes in the unemployment insurance tax rate can take effect.
The full state Assembly, the state Senate, and Gov. Phil Murphy (D) still need to approve the bill before it becomes law.
Unemployment insurance is a joint federal and state program that provides temporary monetary benefits to eligible laid-off workers who are actively seeking new employment. Qualifying individuals receive unemployment compensation as a percentage of their lost wages in the form of weekly cash benefits while they search for new employment.
The federal government oversees the general administration of state unemployment insurance programs. The states control the specific features of their unemployment insurance programs, such as eligibility requirements and length of benefits.
This article was originally posted on New Jersey committee approves bill that includes unemployment insurance tax credits for small businesses