HB 433

Abstract

This Act revises the experience rating methodology for assigning unemployment assessment rates to employers under the Unemployment Insurance Code in Delaware, replacing the current benefit wage ratio methodology with the benefit ratio methodology used by 19 other states. The new methodology is meant to be more responsive to changes in the economy over time, to better sustain the solvency of the Unemployment Trust Fund, and to be easier to administer. The unemployment assessment rate for an employer under this new methodology would be calculated by combining a benefit ratio assessment, an employer size add-on, and an employer industry add-on. The supplemental tax for operations and technology costs that is already included in the Unemployment Code would continue to be added to each employer's overall assessment rate. This bill also reduces new employer unemployment assessment rates and phases in a permanent taxable wage base over three years- $12,500 for calendar year 2025, $14,500 for calendar year 2026, and $16,500 for calendar year 2027 and thereafter. The new methodology would be in effect beginning calendar year 2027. Until the effective date of that new tax rate structure, this Act would also provide temporary relief to employers who pay unemployment tax assessments in calendar year 2025 and 2026 by reducing new employer tax rates, simplifying tax rate schedules, reducing or holding constant overall employer tax rates, and reducing the maximum earned rate. This Act also makes technical corrections to existing Code to conform to the Legislative Drafting Manual and reinserts a historical provision that applied only to 2023.