What is an Experience Rating and how does it affect my tax rate?
Once an employer becomes eligible for experience rating, he will receive one of 18 unemployment insurance tax rates, ranging from .25 percent to 5.40 percent of taxable wages. Each employers tax rate may vary from year to year, depending on previous experience with unemployment and the rate schedule in effect. Nevada uses the Reserve Ratio formula to determine previous experience, which is the method used by a majority of the states. The Employment Security Division maintains a permanent Experience Record for each employer, consisting of accumulated taxes paid, accumulated benefits charged to his account, and average taxable payroll for the prior three years. Each year, the employers reserve ratio is calculated from his experience record to determine his tax rate under the schedule in effect. Generally, the higher the reserve ratio, the lower the employers tax rate will be. For more information regarding the reserve ratio calculation, please see the Employer Handbook.
