Minnesota Business Owners See Tax Hike as Lawmakers Fail to Come to Legislative Agreement

Businesses across Minnesota are expected to see an increase in their unemployment insurance taxes after lawmakers failed to come to an agreement on the issue before the automatic tax hike went into effect.

During the coronavirus pandemic, the state’s unemployment insurance trust fund was depleted, and the tax hike will go to replace the funds and repay the federal government for unemployment aid.

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Virginia Businesses Want More Unemployment Insurance Funding to Avoid Tax Hike

In an effort to prevent a future tax hike on Virginia businesses, Gov. Ralph Northam proposed allocating $862 million in federal relief money to the Unemployment Insurance Trust Fund, but a small business association is warning it might not be enough.

The Unemployment Trust Fund, which provides unemployed Virginians with benefits, is funded primarily through payroll taxes from employers. During the COVID-19 pandemic, Virginia’s fund dried up and the state was forced to borrow money from the federal government. Unless the losses can be fully offset, business taxes would automatically increase to maintain the fund because of the state’s funding formula.

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