Minnesota businesses will save $346.5 million over two years starting in 2014, thanks to a cut in unemployment insurance taxes that was proposed by Gov. Mark Dayton earlier this year and approved by the Minnesota Legislature.
Effective Jan. 1, 2014, for-profit employers will pay lower taxes for funding the unemployment insurance trust fund, which provides temporary jobless benefits to workers who are laid off.
The trust fund went into deficit during the Great Recession because of growing demand for unemployment insurance benefits. In response, the state raised the unemployment insurance tax rate on businesses and borrowed money from the federal government so that it could continue paying temporary benefits to Minnesotans who lost their jobs. But with the state economy improving and new claims for unemployment insurance benefits at their lowest level in nearly a decade in Minnesota, the trust fund now has reserves of $1.2 billion, enabling officials to reduce the tax rate on businesses.