OK, I wasn't gonna go here, but let's get Federal UI taxes straight. There is a federal Unemployment Insurance tax on the first $7,000 in taxable wages per employee, paid entirely by the employer. The gross rate is 6.2%, of which the employer can take a credit of 5.4% (no matter what the employer's SUI rate is) if the UI taxes to the state are paid in full and on time, resulting in the net rate being .8%. The only exception to this is if the state has borrowed money from the federal UI fund to supplemental their UI coffers, and has not paid it back. Then the 5.4% credit is reduced or eliminated altogether. This year, only New York is in this arrears situation.
The federal UI fund is NOT used to provide benefits directly to ex-employees. Ex-employees DO NOT file a claim with the federal government. The federal UI taxes are primarily used as a "bank" from which states can borrow to meet their state UI benefit obligations.
STATE UI rates vary by employer. The rate does depend on the employer's "experience rating" (the amount of benefits for which the employer is "charged"), once the employer has been in business for a certain period of time and an experience history can be established, although the weight given to such experience rating also varies by state.
Now, is that enough?
