Standard Rate
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 security fund.

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 Taxable Wage Rate mailed in December.

Experience Factors
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

An employer has a positive reserve ratio when its 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.

Example, in 2011 employers in the best positive-rate class were assigned a tax rate of 0.960 percent and would pay only $319.68 for each employee who makes at least the $33,300 wage base. The worst deficit-rate class was assigned a tax rate of 6.800 percent, resulting in a tax of $2,264.40 when multiplied by the $33,300 wage base.

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 Code §72-1319.

Idaho Tax Arrays