States use one of four methods to determine an employer’s experience rate: reserve ratio (most common), benefit ratio, benefit wage ratio, and payroll stabilization.
Reserve Ratio = Unemloyment taxes paid – Benefits Charged
Average Taxable Payroll
Benefits Ratio = Benefits Charged
Total Taxable Payroll
Benefit Wage Ratio = Benefit Wages Paid
Total Taxable Payroll
Payroll Stabilization. Currently Alaska is the only state utilizing this method. Under payroll stabilization, the employer’s tax rate is determined by quarter to quarter, and year to year payroll fluctuations. Essentially, as more employees ...
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