Oregon employers are scheduled to pay less in payroll taxes in 2014. The state will drop the payroll tax rate a couple of notches.
Oregon has a self-correcting system for its payroll taxes. The collection rate fluctuates in response to the demand for unemployment benefits.
Tom Fuller is with Oregon’s Employment Department. He says Oregon employers will save an average of $85 per employee. He expects the change to save Oregon businesses about $100 million.
“Payroll taxes are going down because Oregon’s Unemployment Insurance Fund has about $1.8 billion in it. And the formula we use says that’s enough to withstand an 18-month recession. So we can begin ratcheting down the rate at which the Unemployment Trust Fund fills up,” he explained.
Payroll taxes go into the Unemployment Trust Fund and they pay for unemployment benefits.
The latest recession drove the payroll tax rates up to their highest point in order to refill the Unemployment Trust Fund. Despite the demands of the recession, the fund was not emptied.
Editor’s note: Earlier this week, OPB incorrectly reported a figure for a reduction in the state’s parole tax rate. Employers will save an average of $85 per employee. OPB regrets the error.