Rate Computation
New Employer Premium Rate
Rates are determined as of June 30th each year for the next calendar year, so, most new employers are assessed a rate of 2.5% for the first four calendar years that they operate in Indiana. Governmental entities, construction companies, and successor employers have different new employer rates.
| Special Entity Type | Rate |
| Construction | 2.5%, The lesser of 4.0 or the average rate for all construction companies. |
| Government | 1.6%, unless elects reimbursing |
| Successor | Inherits the Predecessor Rate |
Through merit rating, DWD tries to estimate the use of the Unemployment Insurance System by each employer based on the employer’s history in Indiana.
The number of claims as related to the amount of taxes paid is called the experience balance. In Indiana, the experience balance is made up of all contributions paid minus all benefits paid to former employees of the employer or through mutualized benefit charges . The amount of claim filing potential is represented by the most recently completed thirty-six months of payroll ending on June 30th of the year immediately before the year to which the merit rate is going to be applied. These thirty-six months of payroll is referred to as the lookback period for merit rating.
An employer is no longer considered a new employer when they meet BOTH of the following requirements:
The lookback period for merit rating is always the 36 months ending June 30th of the current year for the following year’s rates. |
If an employer has a gap in employment between any July 1st and June 30th period during the lookback, they will go back to the new employer rate under requirement B.
A gap in employment means that the employer had zero gross wages to report to Indiana. The employer will remain at the new employer rate until the year when the gap is no longer in the lookback period.
To qualify for the lowest possible premium, employers must meet both requirements A and B and have no delinquent quarterly reports, outstanding liabilities, or outstanding predecessor liabilities (Requirement C).
Once requirements A and B are met, the employer is eligible for an experience-based rate, also known as a merit rate.
