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House leaders say unemployment tax cut will help grow economy

The Legislature in 2021 moved funds originally headed to reimburse counties and municipalities for COVID measures to boost the unemployment fund.


House leaders said Friday that a dramatic cut in unemployment insurance taxes announced by the Alabama Department of Labor last week will help keep the state’s historic economy and job market growing even more in the coming months.

“Based on the Department of Labor’s announcement, the financial burden that surging unemployment forced upon employers and businesses during the pandemic has come to an end,” said House Republican Caucus speaker nominee Nathaniel Ledbetter, R-Rainsville. “And thanks to the legislature’s strategic planning and wise fiscal policies during the pandemic, Alabama has remained open for business, and our economy is currently the strongest in history.” 

The Labor Department announced that Alabama employers will experience a 54 percent reduction in their unemployment insurance taxes during 2023. Additionally, this tax cut has dropped Alabama into the lowest tax rate schedule, moving the state’s tax rate from Schedule D to Schedule A.  

After massive layoffs caused by the pandemic depleted the state’s unemployment fund, House and Senate budget chairs used federal COVID relief funds to replenish its coffers. Additionally, the issuance of Revive Alabama Grants by Gov. Kay Ivey and actions taken by the Small Business Commission to re-open Alabama businesses faster allowed repayments to the unemployment fund much sooner than surrounding states.  

“The remarkable achievement of moving from the highest to the lowest tax rate category is a direct result of the collaborative efforts over the past several years by Gov. Ivey, Lt. Gov. Ainsworth, the Small Business Commission, and both bodies of the legislature,” said House Ways and Means committee chairman Danny Garrett, R – Trussville. “These tax cuts will benefit businesses of all sizes and ensure that Alabama’s economy, which is already among the best in the nation, remains strong for the immediate future.”

County Commissions are already asking the Legislature to pay back the counties for the funds used to prop up the unemployment fund, which was redirected from reimbursing counties and municipalities for COVID measures.

Jacob Holmes is a reporter at the Alabama Political Reporter. You can reach him at [email protected]

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