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Montana Unemployment Insurance Update

December 31st, 2006 Posted by Mark

In Montana, getting back to the way that tax rates are formulated to charge new employers for their unemployment insurance, new employers are also charged a new employer tax rate when they first operate and remain open for three years. That new employer tax rate is actually based each year on the average tax payments of employers in similar industries in the last year. So you start out by paying what your competitors have been paying in the previous year.

It also stands to reason that as the industry average goes up and down over the course of your three years as a new employer, your new employer tax rate will also go up and down to match. So as a new employer in the state of Montana, your new employer unemployment insurance tax rate will not stay static. You just have to hope that your competitors don’t go out and lay off a few thousand folks while you are starting up your business!

As an employer in the state of Montana, however, there are also other taxes that you have to pay during the course of doing business in the state. One of these taxes is the State Unemployment Insurance Contributions tax, which is the one that we are most familiar with (because we have been talking about it for the last how many blog entries). This is the standard unemployment tax that goes to paying unemployment benefits to people who are laid off or let go by their employers.

Another tax employers in Montana have to pay is the Administrative Fund Tax. This tax keeps the Department of Labor and Industry operating up to snuff, and pays for the operations of the Job Services office as well. For most employer in Montana, this tax amounts to about .0013 of your taxable wages. You pay out this tax every quarter, and each quarter the amount could be different depending on how much wages you have paid out that quarter.

The third tax that goes along with Montana’s unemployment insurance system is the Federal Unemployment Tax Act Tax. This tax goes straight to the Internal Revenue Service, and helps to run Montana’s unemployment insurance system.