October 20, 2021
2021-1909
New Jersey calendar year 2022 SUI, TDI and FLI taxable wage bases to increase; fiscal year 2022 SUI tax rates increased
The New Jersey Department of Labor and Workforce Development released its proposed annual regulatory update to reflect an increase to the calendar year 2022 state unemployment insurance (SUI), temporary disability insurance (TDI) and family leave insurance (FLI) taxable wage bases.(New Jersey Department of Labor and Workforce Development regulatory update website.)
- The 2022 employer/employee SUI taxable wage base will increase to $39,800, up from $36,200 for calendar year 2021.
- The 2022 TDI/FLI taxable wage base will increase to $151,900, up from $138,200 for 2021.
- The 2022 TDI/FLI rate information has not yet been published; once released the information will be posted here.
Other SUI and TDI amounts for calendar year 2022
Under the proposed regulations, other SUI and TDI amounts for calendar year 2022 will be as follows:
- Maximum unemployment insurance (UI) weekly benefits rate: $804 (up from $731)
- Maximum TDI weekly benefit rate: $993 (up from $903)
- Alternative earnings test amount for UI and TDI: $12,000 (up from $11,000)
- Base week amount: $240 (up from $220)
Fiscal year 2022 SUI tax rates increased
As we reported, the fiscal year 2022 (July 1, 2021 to June 30, 2022) SUI tax rates increased to range from 0.5% to 5.8% on Rate Schedule C, up from a range of 0.4% to 5.4% on Rate Schedule B for FY 2021 (July 1, 2020 to June 30, 2021). The new employer rate remains at 2.8% for FY 2022. (EY Tax Alert 2021-1582, 8-30-2021.)
The fiscal year 2022 tax rates continue to include the 0.1% Workforce Development Fund rate and the 0.0175% Supplemental Workforce Fund rate. (New Jersey Department of Labor & Workforce Development website.)
Fiscal year 2022 rate notices
Employer tax rate notices are available via the Employer Access system and were mailed to some employers by August 19, 2021. Experience-rated employers had the option to make a voluntary contribution to lower their assigned SUI tax rate within 30 days of the rate notice mailing date.
Law reduces impact of COVID-19 UI benefits on SUI tax rates over next three fiscal years
As we reported, AB 4853 reduces the effect of regular state COVID-19 UI benefits on New Jersey employer SUI tax rates for fiscal years 2022 through 2024. (New Jersey's fiscal year for SUI tax rating purposes is July 1 through June 30. (EY Tax Alert 2021-0395, 2-19-2021.)
AB 4853 prevents moving to a higher SUI rate schedule over the next three fiscal years, something that had been anticipated due to a reduction in the state's UI trust fund from COVID-19 UI benefit payouts. It is estimated that the highest rate schedule, Schedule E+, would have been in effect for FY 2022, with rates ranging from 1.3% to 7.7%.
Following are the maximum SUI tax rate ranges under AB 4853:
- For fiscal year 2022 (July 1, 2021 to June 30, 2022) the assignment of SUI tax rates moved from the FY 2021 Rate Schedule B, with rates ranging from 0.4% to 5.4%, to Rate Schedule C, with rates ranging from 0.5% to 5.8%.
- For fiscal year 2023 (July 1, 2022 to June 30, 2023) the assignment of SUI tax rates will move from Rate Schedule C to Rate Schedule D, with rates ranging from 0.6% to 6.4%.
- For fiscal year 2024 (July 1, 2023 to June 30, 2024) the assignment of SUI tax rates will move from Rate Schedule D to Rate Schedule E, with rates ranging from 1.2% to 7.0%.
The law provides that if calculation of the actual fund reserve ratio would result in the selection of a rate schedule with lower contribution rates than those above for fiscal years 2022 through 2024, the lower rate schedule will apply.
COVID-19 benefit charging to employers
AB 4853 also confirmed that COVID-19 UI benefits will not be charged to individual employer accounts for experience rating purposes for the period of the public health emergency and state of emergency declared by Governor Phil Murphy on March 9, 2020, and through any subsequent extensions of the state of emergency. This provision prevents payments of regular state COVID-19 UI benefits from having a direct impact on fiscal year tax rates. Governor Philip D. Murphy ended the public health emergency on June 4, 2021 and did not issue an Executive Order extending the relief of charging COVID-19 benefits to employer accounts. (Executive Order 244; governor's news release, 6-4-2021.)
New Jersey federal UI loan and the future impact on employer costs
New Jersey began borrowing from the federal government in August 2020 when the state's UI trust fund became insolvent. As of October 7, 2021, the US Department of Treasury shows that New Jersey has an outstanding federal UI loan balance of $426,034,927.34. Failure to repay the federal loan balance by November 10, 2022, would result in a FUTA credit reduction of 0.3% for calendar year 2022. The Department estimates that under current conditions it may be May 2023 before the state's federal UI loan balance is fully repaid.
Under the American Rescue Plan Act (ARPA), interest was waived on federal UI loans through September 6, 2021. States that continue to have a federal UI loan balance after September 6, 2021 will see interest start accruing at a rate of 2.2777%. States are not allowed to use regular UI trust fund monies to pay the interest. Most states charge the interest back to employers through a special surcharge, with others using general state funds or loans to avoid increasing employer SUI taxes.
Due to the financial crisis of 2008, New Jersey obtained federal UI loans and employers were charged a federal interest assessment to pay the interest on the loan balance.
Under N.J.A.S. 43:21-14.3, the Department is required in June of each year to determine the anticipated amount of federal interest that will be due on an outstanding federal UI loan balance by September 30 that year. If there are not sufficient funds in the state's unemployment compensation auxiliary fund to pay the entire amount due, the Department must issue federal interest assessments to employers, determined by multiplying the amount of an employer's calendar year SUI contributions by a ratio calculated by the Department under N.J.A.S. 43:21-14.3(c). The minimum assessment amount is $5.00. These interest assessment notices are usually issued in July of the year the federal interest is due (i.e., July 2022 to pay federal interest due on September 30, 2022). Payment is due within 30 days of the assessment's mailing date.
Although the Department has not yet announced how any federal interest due by September 30, 2021 will be paid, the fiscal year 2022 budget summary indicated the intention to pay the interest due from the unemployment compensation auxiliary fund if there is enough available in the fund. As of September 13, 2021, the US Department of Treasury showed that New Jersey had accrued interest of $97,503.16 for fiscal year 2021.
See also the Department's Analysis of the fiscal year 2022 Budget (dated 4-2021) for more information on payment of federal interest. According to the analysis, Governor Phil Murphy anticipates $26 million in interest payments would need to be paid for FY 2022. The analysis states the intention to change the language of N.J.A.S. 43:21-14.3 to allow partial payment from the unemployment compensation auxiliary fund so that even if there are not sufficient funds in the auxiliary fund to completely cover the FY 2022 interest, New Jersey employers would pay a reduced amount in interest assessments.
The analysis shows that the unemployment compensation auxiliary fund is projected to carry $15.5 million into fiscal year 2022, with the total reaching $16.1 million by the close of the fiscal year. The auxiliary fund is the repository for all interest and penalties imposed upon employers for violating UI regulations.
The New Jersey Business & Industry Association (NJBIA) reports that state Republican legislators are calling for a special legislative session in 2021 to pass legislation to relieve employers of the burden of increased SUI taxes over the next three years to replenish the state's UI trust fund balance. The NJBIA also reports that some legislators have been calling on the governor to instead use federal COVID-19 relief funds to replenish the UI trust fund.
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For additional information concerning this Alert, please contact:
| Workforce Tax Services - Employment Tax Advisory Services | |
| • Kristie Lowery (kristie.lowery@ey.com) | |
| • Kenneth Hausser (kenneth.hausser@ey.com) | |
| • Debera Salam (debera.salam@ey.com) |
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ATTACHMENT
EY Payroll News Flash
FAQs
What is the NJ FLI rate for 2022? ›
Claimants are paid 85% of their average weekly wage, up to the maximum weekly benefit rate set for that calendar year. In 2022, the maximum weekly benefit rate is $993 per week. In 2023, the maximum weekly benefit rate is $1,025 per week.
What is the FLI rate for 2023 NJ? ›For 2023, employees will also benefit from a significant decrease in their NJ FLI payroll deductions from the current rate of 0.14% of the first $151,900 in wages to 0.06% of the first $156,800 in wages for 2023.
What is the maximum NJ FLI tax? ›For 2021, workers contribute 0.28% of their wage cap. The wage cap is the first $138,200 in covered wages earned during the calendar year, and the maximum yearly deduction for Family Leave Insurance is $386.96. For 2022, workers contribute 0.14% of their wage cap.
What is FLI on NJ state income tax? ›Add any amount listed as FLI to your New Jersey withholdings? Your employer may report your contributions to Family Leave Insurance (FLI) under Box 17. This amount should not be added to your New Jersey Income Tax withholdings or reported on the New Jersey withholding line of Form NJ-1040.
What is the wage base for NJ TDI? ›To qualify for Temporary Disability Insurance in 2022, you must have worked 20 weeks earning at least $240 weekly, or have earned a combined total of $12,000 in the base year.
How does NJ FLI work? ›New Jersey FAMILY LEAVE INSURANCE (FLI)
Since July 1, 2020, FLI provides workers with 12 continuous weeks (over a 12-month period) or 56 intermittent days of paid leave. Most workers take FLI to bond with a new child — birth, adopted or foster — in the first year after birth or placement.
Some important facts regarding FLI: The law applies to all private and governmental employers subject to the “Unemployment Compensation Law,” (R.S.43:21-1 et seq.), including local governmental employers who have chosen not to elect disability insurance coverage under the New Jersey Temporary Disability Benefits Law.
What is the maximum temporary disability in NJ? ›Claimants are paid 85% of their average weekly wage, up to the maximum weekly benefit rate set for that calendar year. In 2021, the maximum weekly benefit rate is $903 per week. In 2022, the maximum weekly benefit rate is $993 per week.
How much does NJ permanent disability pay? ›For a total disability where you can't return to work, you receive 70% of the weekly wages you earned at the time of injury. The weekly salary is subject to a maximum of compensation of 75% of the New Jersey's statewide average weekly wages and a minimum of 20%.
Are NJ TDI benefits taxable? ›Temporary disability benefits are considered third-party sick pay for both Social Security (FICA) and federal income tax purposes, and must be reported on your federal income tax return.
What is NJ unemployment max for 2023? ›
The weekly benefit rate is capped at a maximum amount based on the state minimum wage. For 2022, the maximum weekly benefit rate is $804. For 2023, the maximum weekly benefit rate is $830. We will calculate your weekly benefit rate at 60% of the average weekly wage you earned during the base year, up to that maximum.
What are the New Jersey employment laws for 2023? ›A New Jersey state law signed in February 2019, sets forth mandatory increases to the state minimum wage. That law requires increases of at least $1 annually until the minimum wage reaches $15 per hour in 2024. As a result, on January 1, 2023, the statewide minimum for most employees will increase to $14.13 per hour.
What is the Medicare tax rate for 2023? ›Social security and Medicare tax for 2023.
The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2022. There is no wage base limit for Medicare tax. Social security and Medicare taxes apply to the wages of household workers you pay $2,600 or more in cash wages in 2023.
General information about the FLI premium
Effective January 1, 2023 the FLI premium is . 8% of the employee's gross wages. The employee is responsible for 72.76% of this premium. Employers with 50 or more employees are responsible for paying the other 27.24%.
If you exhaust the weeks of unemployment compensation available to you through your state's laws, you will be eligible for an additional 13 weeks of benefits. These benefits will be federally funded, but you will still receive them through your state unemployment insurance program.
How long will nj get the extra 300? ›Yes, the stimulus bill provides an extra $300 a week in addition to one's base unemployment compensation benefit through March 14, 2021.
Is unemployment benefits extended in NJ? ›Additionally, from July 1, 2020 through April 9, 2022, New Jersey's high unemployment rate triggered state extended benefits for NJ workers who have exhausted unemployment benefits, if, among other requirements, they meet the minimum earnings requirement and the date of their initial UI claim is May 12, 2019 or later.
Does NJ follow the 7 year rule background check? ›Under the Fair Credit Reporting Act, background checks of individuals who earn less than $75,000 per year can only look back seven years for certain types of information, including: arrests not leading to conviction. bankruptcies. liens.
Do you legally have to give 2 weeks notice in New Jersey? ›The presumption is not only that your company can fire you for almost any reason, but also that you can quit your job for almost any reason without giving advance notice. Accordingly, while it is customary to give two weeks' notice when you resign, there is no legal requirement that you do so.
What is the 2 year employment rule? ›With some notable exceptions, if you have less than two years' continuous employment with your employer, then they can dismiss you by giving you no more than statutory or contractual notice and there is nothing you can do about it. This is often referred to for short as 'the two-year rule' which term we will use here.
At what income level does Medicare tax increase? ›
Will Additional Medicare Tax be withheld from an individual's wages? An employer must withhold Additional Medicare Tax from wages it pays to an individual in excess of $200,000 in a calendar year, without regard to the individual's filing status or wages paid by another employer.
Is Medicare taxed after 65? ›Your age doesn't change whether or not you pay Medicare taxes. If you retire from your career at the age of 65 and decide to start working part-time, your income is subject to Medicare taxation.
What changes are coming to Medicare in 2023? ›For 2023, the Part A deductible will be $1,600 per stay, an increase of $44 from 2022. For those people who have not worked long enough to qualify for premium-free Part A, the monthly premium will also rise. The full Part A premium will be $506 a month in 2023, a $7 increase.
How long is FLI bonding in NJ? ›Under NJFLA, employers must provide 12 weeks of job-protected family leave to employees so they can care for or bond with a child.
What does it mean by FLI? ›FLI means forward-looking information, including guidance and estimates, provided by the Company.
What does FLI mean in box 15 on w2? ›FLI may stand for Family Leave Insurance. You may want to contact your employer for an explanation.