How are unemployment rates figured?
The rates are determined by first calculating the amount of your cumulative reserve (the total taxes you have paid since you started paying minus the total benefits charged to your account) to determine if your account has a positive or negative balance. This then determines which tax rate schedule applies. Next the amount of your six-year reserve (the total taxes you have paid in the last six years minus the total benefits charged to your account in the last six years) is divided by your average taxable payroll in the last three years. This calculation result is a reserve ratio. The reserve ratio is then applied to the appropriate tax rate schedule (Positive Balance or Negative Balance) to determine your tax rate. The higher your reserve ratio, the lower your tax rate.
