Covered Employers

• If you are a Montana employer and have a payroll greater than $1,000 a year you will need to pay unemployment taxes. This covers most businesses, but the state has additional qualifiers. If your business is already subject to Montana or federal unemployment taxes, you paid more than $20,000 in cash for agricultural labor in any quarter, you employed 10 or more agricultural laborers in 20 different weeks during the preceding year or you employed domestic help who was paid more than $1,000 in any quarter, you are subject to unemployment taxes. Only one condition needs to be met to be considered a covered employer.
  
  

The Taxes

• Montana employers pay three unemployment insurance taxes. The first tax is for the state fund that is actually used to pay benefits. The second tax is an administrative tax used to help fund the Montana Department of Labor and Industry. It ranges from 0.13 to 0.18 percent of taxable wages each quarter. The third tax is the federal unemployment insurance tax rate of 6.2 percent, though 5.4 percent is credited back to the company if it participates in its state unemployment insurance program.
  
  

Experience

• The actual percentage paid in Montana unemployment taxes can vary from employer to employer and even with the same employer from year to year. It depends on how likely the employer is to lay off employees. This is called an experience factor. New businesses and businesses with a history of layoff will pay the highest rates while well-established businesses with few layoffs pay the lowest rate.
  
  

Amounts Paid

• Montana has 11 different unemployment tax schedules. It uses each with a variety of rates depending on an employer's experience rating and the unemployment fund balance. A higher balance means lower contribution rates for employers. In 2011, Montana is using schedule VII with contributions rates that range from 0.82 to 6.12 percent with a average rate of 2.32 percent. The average rates among the 11 schedules is 1.12 percent to 3.12 percent. It is paid on the first $26,300 of taxable wages in a year.