Changes in unemployment insurance legislation in 2001, (EXCERPT), Monthly Labor Review Online, January 2002

January 2002, Vol. 125, No. 1

Changes in unemployment
insurance legislation in 2001

Loryn Lancaster and Ann Vogel

During 2001, one Federal enactment affected the Federal-State unemployment insurance program. The "Economic Growth and Tax Relief Reconciliation Act of 2001" (P.L. 107-16) will affect the unemployment insurance program in two ways. First, the voluntary withholding rate of Federal income taxes on unemployment insurance benefits has been reduced from 15 percent to 10 percent. The amendment applies to amounts paid after the 60th day after enactment, which pertains to payment made on and after August 7, 2001. Those States that contain generic language in their unemployment insurance State laws, as regards the withholding requirement, can implement the new percentage without a law change. However, the five States that have provisions that include the 15-percent rate language will need to amend their State unemployment insurance laws before the withholding rate can change. Second, the exclusion of employer-provided educational assistance from the Federal Unemployment Tax Act definition of wages has been extended to graduate education and the exclusion is permanent for both undergraduate and graduate education courses. This amendment is effective with respect to courses that students began after December 31, 2001. The States have the option of amending their unemployment insurance State laws to include this provision.

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