Gov. Kristi Noem signs first bill of 2023 into law, creating unemployment insurance tax cut
Gov. Kristi Noem signed into law Wednesday a bill that cuts employer contributions for unemployment insurance by 0.5%.
The law, named HB 1011, will provide an $18 million tax cut for South Dakota businesses.
“South Dakota’s economy is booming. Our unemployment rate is the lowest in our history, and our people are choosing to work,” Noem said in a press release. “So many new businesses are choosing to call our state home, and our existing businesses are thriving, so our unemployment reserves are stronger than ever. It’s time to put money back in the pockets of hardworking South Dakota business owners.”
More:Foreign agriculture investments bill reaches South Dakota legislature
The state's Unemployment Insurance Trust Fund uses an average high-cost multiplier (AHCM). Having an AHCM of 1.0 means there are enough funds to cover a full year of benefits during a recession. A higher AHCM means there is more in the Trust Fund.
Since 2016, employer tax rates have been based on the fiscal-year-end AHCM.
Now, HB 1011 will reduce employer contribution rates by 0.5% when the balance in the Trust Fund is at or above an AHCM of 1.5 at the end of the fiscal year.
The bill also adjusts the trigger point for a surcharge, which is an additional tax employers have to pay when the fund drops below $11 million. The trigger will instead be tied to an AHCM ratio, rather than a dollar amount.
This is the first bill Noem has signed into law for the 2023 legislative session.
This article originally appeared on Sioux Falls Argus Leader: Gov. Kristi Noem signs unemployment insurance tax cut bill into law