All new employers except cost-reimbursement employers, begin with the same standard
unemployment insurance tax rate for at least the first six calendar quarters. The standard rate is
established by law and can vary depending on economic conditions and the size of the employment
Depending on the employer’s experience with the unemployment insurance program, this initial
standard rate may increase or decrease over time. Changes in the rate depend on the employer’s
experience rating and its relationship to the experience ratings of all other Idaho employers.
Rates are computed annually based on fiscal year July 1 through June 30 and are assigned each
calendar year with a Notice of Tax Rate mailed in December.
An employer’s experience rate is ranked by calculating the employer’s reserve ratio. This ratio is
calculated by subtracting the employer’s accumulated benefit payments from the employer’s
accumulated tax payments and then dividing by the employer’s average taxable payroll. Average
taxable payroll is the average of up to four fiscal years depending on how long the employer has paid
wages as provided by Idaho Code §72-1351.
Accumulated Total Taxes – Accumulated Total Benefits = Reserve Ratio
Average Taxable Payroll
An employer has a positive reserve ratio when total taxes paid exceed the total unemployment
benefits charged to that employer’s account. An employer has a negative reserve ratio when benefits
charged exceed taxes paid. Each year the department makes two lists, one for positive-rated
employers and one for negative-rated employers. These lists rank employers by reserve ratio so each
employer may be assigned to a rate class. Those with the highest positive reserve ratios are assigned
the lowest tax rates, while negatively rated employers pay taxes at substantially higher rates. For
example, in 2007 employers in the best positive-rate class were assigned a tax rate of 0.372 percent
and would pay only $112.34 for each employee who makes at least the $30,200 wage base. The
worst positive-rate class was assigned a tax rate of 1.240 percent, resulting in a tax of $374.48 when
multiplied by the $30,200 wage base. The best negative-rate class was assigned a rate of 2.232
percent, which when multiplied by the $30,200 wage base results in a tax of $674.06, while those in
the worst rate class pay at the rate of 5.400 percent or $1,630.80 when multiplied by $30,200.
Eligibility for a reduced rate
To be eligible for a tax rate that is lower than the standard rate, an employer must have established a
positive reserve ratio, filed all reports, paid all money due prior to Sept. 30 and participated in the
system at least six calendar quarters prior to the computation date of June 30 as provided by Idaho