Iowa's unemployment insurance rates remain low

(The Center Square) - Iowa’s unemployment insurance rates for employers will remain at the lowest allowable level for a third year in a row, state officials said.

Contribution rates in 2025 will be drawn from the same table as last year, which saved employers approximately $72.20 per employee when the rate was first lowered to this level in 2023, according to Gov. Kim Reynolds.

The unemployment insurance rate for employers is determined by a formula based partially on the current balance in the Unemployment Insurance Trust Fund, unemployment benefit history, and covered wage growth.

During the pandemic, Reynolds put $727 million of the state’s pandemic relief money toward the trust fund during record unemployment benefit payouts, according to her office.

“I’m pleased that we’ll be able to continue to support Iowa employers by maintaining unemployment taxes at their lowest possible rate,” Reynolds said. “Smart management of state resources, combined with smart ideas like Iowa Workforce Development’s Reemployment Case Management program, have helped us place Iowa’s Unemployment Insurance Trust Fund in one of the best positions it’s ever been in. Today’s announcement means Iowa business owners will have one less thing to worry about as they try to navigate our uncertain national economy.”

Each year, Iowa Workforce Development must establish a table to implement for insurance rates when determining what the impact will be on employers.

There are eight different tax rate tables, with Table 1 ranging from 0% to 9% and Table 8 ranging from 0% to 7%, according to IWD. This will be the third year using Table 8.

Unemployment insurance rates are determined by the North American Industry Classification System , which uses a coding system to determine where industries will be placed on the table, according to IWD .

If the balance in the UI Trust Fund falls too low, that could trigger a move to a different table that collects more revenue, according to the department.

In 2024, the taxable wage base rose from $36,100 to $38,200, according to IWD.

The now three-year trend of unemployment insurance rates marks the lowest Iowa’s rates have been over the past 25 years, according to the governor.

“Alongside Governor Reynolds’ leadership, we’ve worked hard to create a sustainable tax environment for Iowa’s employers to help them make clear decisions when building their workforce in today’s economy,” said Beth Townsend, IWD executive director. “Easing the tax burden and revamping our reemployment process means that we’ve been able to create a more responsive workforce system that also has kept our UI Trust Fund strong.”