Unemployment Insurance
Unemployment Insurance

Your business is liable for quarterly UI tax contributions if it meets any one of the following criteria.
  • Pays $1,500 or more in wages in any calendar quarter or has at least one employee during any 20 weeks in a calendar year.
  • Acquires all or part of a business that was an employer subject to UI taxes at the time of the acquisition.
  • Is liable under the Federal Unemployment Tax Act (FUTA) and has employees in South Carolina.
  • Elects to become a liable employer.
  • Pays cash wages of $1,000 or more in any calendar quarter for domestic services.
Note that some state laws differ from the federal law.

UI taxes are only charged on the first $14,000 of wages earned by an individual. This is what is referred to as taxable wages. Once you have paid taxes on the first $14,000 of an individual’s wages, you do not owe any additional taxes for the remainder of the calendar year. Wages earned after $14,000 are defined as excess wages.

In South Carolina, the base tax rate for a new employer under Department of Employment & Workforce law is 1.55 percent, plus applicable surcharge, of the total taxable wages. After 12 consecutive months of liability as of June 30, the employer may have his state employment insurance tax rate reduced based on certain factors. If the employer’s base state tax rate for contribution purposes is reduced below 1.55 percent, the federal excise tax will continue to be paid at a rate of 0.8 percent. You can learn more by going here.

In addition to the contribution rate there is also an assessment, known as the Contingency Assessment, of .06% on the taxable wages reported each quarter.

In some cases, it may be possible to report wages and pay compensation in a companies' home state. The decision to grant reciprocity with another state for an individual company is decided on a case-by-case basis. For example, a company with operations in multiple states which has an active account in their home state might be a candidate for a reciprocal agreement, allowing contributions to be made in the company's home state if both state's agree.  You can read more about Interstate Reciprocal Coverage Arrangement here.

For further information about Unemployment Insurance, please contact the Call Center at the South Carolina Department of Employment & Workforce (DEW); 803.737.2400 (option 3, option 3, then 2).
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