Georgia Allocates COVID-19 Relief Funds to Keep Employers Tax Rates Stable

By October 16, 2020COVID-19, SUI Tax

On October 14, 2020 Georgia Governor Brain Kemp announced that Georgia will allocate $1.5 Billion in federal COVID-19 Relief Funds to the state unemployment trust fund.  This action will save Georgia employers millions of dollars in state and federal unemployment taxes and save the Georgia Department of Labor millions of dollars in interest payments on Title XII loans.  Here are highlights resulting from this historic action:

  • As a result of allocating $1.5 Billion in federal COVID-19 Relief Funds for this purpose, Georgia employers will save an average of $350 per year for each employed worker. Without these funds, the Georgia Department of Labor would be forced to increase the taxable wage limitation, which would result in higher tax payments per employee in future years.
  • The Georgia Department of Labor would be required to increase unemployment tax rates for employers between 300% and 400% in 2021 and future years. This would be necessary in order to replenish the state unemployment trust fund as well as pay interest on federal Title XII loans that have been secured during 2020 to continue to pay state unemployment benefits.
  • The Georgia Department of Labor estimates that benefit payments will continue to outpace revenue. By 2023, without this move and without an increase in employer taxes, the Department estimates that their Title XII loan balance would exceed $1 Billion.  Thus, Georgia employers would then lose Federal Unemployment Tax Act (FUTA) tax credits, resulting in a cost of $85 Million per year, compounded annually.  If this continues until 2020, FUTA tax credit losses could cost Georgia employers $500 Million.

The overall purpose of this action by the Governor is to allow employers across the state to focus on the growth and success of their businesses without having the additional pressure of a rising unemployment tax.

This trend of state unemployment agencies using COVID-19 Relief Funds to replenish state unemployment trust funds is increasing due to the fact that the true impact that COVID-19 is having on these trust funds is now becoming clearer and the translation of that to future tax rates.  We will continue to monitor this trend and report any new developments across the country as the information becomes available.


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Josh Kendall

Author Josh Kendall

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