Computation of Rates
The seven factors of an experiencedbased tax rate:
Reserve Ratio Factor
Benefit Ratio Factor
State Adjustment Factor
Basic Rate
Solvency Measures and the Trigger Mechanism
Surcharge
Additional Contributions
Interest Factor
Reserve Ratio Factor
An employer's reserve ratio factor is a lifetime measure of the employer's risk with unemployment and is determined by dividing the balance in the employer's reserve account (i.e., the lifetime unemployment contributions paid by the employer minus the lifetime benefits charged against the employer's account) by the employer's average annual taxable payroll for the last three fiscal (July  June) years. This ratio (percentage) is then crossreferenced to the applicable table in the PA UC Law,
See Reserve Ratio Factor Table. The reserve ratio factor is part of the contribution rate for experience rated employers. This factor is determined annually and ranges from 0 percent to 3.2 percent. The employer's reserve ratio factor is identified on the Contribution Rate Notice (Form UC657).
In determining experience rates, the Pennsylvania UC Law places employers into groups for contribution rate computation purposes. These groups are based on the length of time that an employer has paid contributions.
Group 1:
An employer who paid contributions for at least one quarter during the 12month period ending on the computation date (June 30), and for one or more of the four completed calendar quarters immediately preceding such 12month period, qualifies as a Group 1 employer. A Group 1 employer's reserve ratio factor is equal to onethird of the Group 3 rate.
Group 2:
If an employer paid contributions for at least one quarter in each of the two 12month periods ending on the computation date (June 30), and for one or more of the four completed calendar quarters immediately preceding such two 12month periods, the employer will be assigned to Group 2. An employer assigned to Group 2 has a reserve ratio factor equal to twothirds of the Group 3 rate.
Group 3:
An employer who paid contributions for one or more quarters in each of the three 12month periods ending on the computation date (June 30), and for at least one or more of the four completed calendar quarters immediately preceding such three 12month periods, is classified as a Group 3 employer.
NOTE: An employer who has sufficient employer experience to be classified in Group 3 cannot be classified in either Group 1 or Group 2, nor can an employer who has sufficient employer experience to be classified in Group 2 be classified in Group 1.
Example:
Lifetime Reserve Account Balance
divided by the Average Annual Taxable Payroll
equals Employer Percentage which is
applied to the Reserve Ratio Factor Table to determine the Reserve Ratio Factor 
2,144 ÷ 16,583 = .1292 or 12.92% = 0.2% for Group 1 Employers 0.4% for Group 2 Employers 0.6% for Group 3 Employers 
Utilizing the Reserve Ratio Factor Table, in the example given, the 12.92 percent translates to a reserve ratio factor of 0.2 percent for a Group 1 employer, 0.4 percent for a Group 2 employer and 0.6 percent for a Group 3 employer.
Reserve Ratio Factor Table  2017 and Thereafter
Employer's Reserve Account as a Percentage of Taxable Wages [Employer Percentage] 
Reserve Ratio Factor Group 1 [1/3 of Group 3 Rate]

Reserve Ratio Factor Group 2 [2/3 of Group 3 Rate]

Reserve Ratio Factor Group 3

Greater than 25% 
0.0% (.000)

0.0% (.000)

0.0% (.000)

Greater than or equal to 21% but less than 25% 
0.1% (.001)

0.2% (.002)

0.3% (.003)

Greater than or equal to 18% but less than 21% 
0.2% (.002)

0.3% (.003)

0.4% (.004)

Greater than or equal to 15% but less than 18% 
0.2% (.002)

0.4% (.004)

0.5% (.005)

Greater than or equal to 12% but less than 15% 
0.2% (.002)

0.4% (.004)

0.6% (.006)

Greater than or equal to 9% but less than 12% 
0.3% (.003)

0.5% (.005)

0.7% (.007)

Greater than or equal to 7% but less than 9% 
0.3% (.003)

0.6% (.006)

0.8% (.008)

Greater than or equal to 5% but less than 7% 
0.3% (.003)

0.6% (.006)

0.9% (.009)

Greater than or equal to 3% but less than 5% 
0.4% (.004)

0.7% (.007)

1.0% (.010)

Greater than or equal to 1% but less than 3% 
0.4% (.004)

0.8% (.008)

1.1% (.011)

Greater than or equal to 0% but less than 1% 
0.4% (.004)

0.8% (.008)

1.2% (.012)


Less than 0% but greater than 1% 
0.5% (.005)

0.9% (.009)

1.3% (.013)

Less than or equal to 1% but greater than 2% 
0.5% (.005)

1.0% (.010)

1.4% (.014)

Less than or equal to 2% but greater than 3% 
0.5% (.005)

1.0% (.010)

1.5% (.015)

Less than or equal to 3% but greater than 4% 
0.6% (.006)

1.1% (.011)

1.6% (.016)

Less than or equal to 4% but greater than 5% 
0.6% (.006)

1.2% (.012)

1.7% (.017)

Less than or equal to 5% but greater than 6% 
0.6% (.006)

1.2% (.012)

1.8% (.018)

Less than or equal to 6% but greater than 7% 
0.7% (.007)

1.3% (.013)

1.9% (.019)

Less than or equal to 7% but greater than 8% 
0.7% (.007)

1.4% (.014)

2.0% (.020)

Less than or equal to 8% but greater than 9% 
0.7% (.007)

1.4% (.014)

2.1% (.021)

Less than or equal to 9% but greater than 10% 
0.8% (.008)

1.5% (.015)

2.2% (.022)

Less than or equal to 10% but greater than 11% 
0.8% (.008)

1.6% (.016)

2.3% (.023)

Less than or equal to 11% but greater than 12% 
0.8% (.008)

1.6% (.016)

2.4% (.024)

Less than or equal to 12% but greater than 16% 
0.9% (.009)

1.7% (.017)

2.5% (.025)

Less than or equal to 16% but greater than 20% 
0.9% (.009)

1.8% (.018)

2.6% (.026)

Less than or equal to 20% but greater than 28% 
0.9% (.009)

1.8% (.018)

2.7% (.027)

Less than or equal to 28% but greater than 100% 
1.0% (.010)

2.0% (.020)

3.0% (.030)

Less than or equal to 100% or lower 
1.1% (.011)

2.2% (.022)

3.2% (.032)

Reserve Ratio Factor Table through 2016
Employer's Reserve Account as a Percentage of Taxable Wages [Employer Percentage] 
Reserve Ratio Factor Group 1 [1/3 of Group 3 Rate]

Reserve Ratio Factor Group 2 [2/3 of Group 3 Rate]

Reserve Ratio Factor Group 3

Greater than 25% 
0.0% (.000)

0.0% (.000)

0.0% (.000)

Greater than or equal to 21% but less than 25% 
0.1% (.001)

0.2% (.002)

0.3% (.003)

Greater than or equal to 18% but less than 21% 
0.2% (.002)

0.3% (.003)

0.4% (.004)

Greater than or equal to 15% but less than 18% 
0.2% (.002)

0.4% (.004)

0.5% (.005)

Greater than or equal to 12% but less than 15% 
0.2% (.002)

0.4% (.004)

0.6% (.006)

Greater than or equal to 9% but less than 12% 
0.3% (.003)

0.5% (.005)

0.7% (.007)

Greater than or equal to 7% but less than 9% 
0.3% (.003)

0.6% (.006)

0.8% (.008)

Greater than or equal to 5% but less than 7% 
0.3% (.003)

0.6% (.006)

0.9% (.009)

Greater than or equal to 3% but less than 5% 
0.4% (.004)

0.7% (.007)

1.0% (.010)

Greater than or equal to 1% but less than 3% 
0.4% (.004)

0.8% (.008)

1.1% (.011)

Greater than or equal to 0% but less than 1% 
0.4% (.004)

0.8% (.008)

1.2% (.012)


Less than 0% but greater than 1% 
0.5% (.005)

0.9% (.009)

1.3% (.013)

Less than or equal to 1% but greater than 2% 
0.5% (.005)

1.0% (.010)

1.4% (.014)

Less than or equal to 2% but greater than 3% 
0.5% (.005)

1.0% (.010)

1.5% (.015)

Less than or equal to 3% but greater than 4% 
0.6% (.006)

1.1% (.011)

1.6% (.016)

Less than or equal to 4% but greater than 5% 
0.6% (.006)

1.2% (.012)

1.7% (.017)

Less than or equal to 5% but greater than 6% 
0.6% (.006)

1.2% (.012)

1.8% (.018)

Less than or equal to 6% but greater than 7% 
0.7% (.007)

1.3% (.013)

1.9% (.019)

Less than or equal to 7% but greater than 8% 
0.7% (.007)

1.4% (.014)

2.0% (.020)

Less than or equal to 8% but greater than 9% 
0.7% (.007)

1.4% (.014)

2.1% (.021)

Less than or equal to 9% but greater than 10% 
0.8% (.008)

1.5% (.015)

2.2% (.022)

Less than or equal to 10% but greater than 11% 
0.8% (.008)

1.6% (.016)

2.3% (.023)

Less than or equal to 11% but greater than 12% 
0.8% (.008)

1.6% (.016)

2.4% (.024)

Less than or equal to 12% but greater than 16% 
0.9% (.009)

1.7% (.017)

2.5% (.025)

Less than or equal to 16% but greater than 20% 
0.9% (.009)

1.8% (.018)

2.6% (.026)

Less than or equal to 20% or lower 
0.9% (.009)

1.8% (.018)

2.7% (.027)

Benefit Ratio Factor
The benefit ratio factor is a shortterm comparison of the employer's taxable payroll and UC benefits charged. This factor is determined by dividing the employer's average annual benefit costs for the last three fiscal years (July  June) by the employer's average annual payroll for the last three fiscal years ending on the computation date (June 30). The benefit ratio factor is determined annually and ranges from 0 percent to 5 percent. This factor is identified on the Contribution Rate Notice (Form UC657).
Example:
Average Annual Benefit Costs
divided by the Average Annual Taxable Payroll
equals Benefit Ratio Factor 
3,794 ÷ 117,488 = .0322 or 3.2% 
NOTE: Compute to a tenth of a percentage, with fractional parts rounded to the nearest tenth. If the computed factor is greater than 5 percent (.05), then decrease the factor to 5 percent (.05). The true percentage will be shown on the Contribution Rate Notice (Form UC657).
State Adjustment Factor
The state adjustment factor acts as an assessment on all employers and uniformly levies the common benefit costs that are paid out of the Pennsylvania UC Fund, but which are not charged to any specific employer account. This factor is determined annually. The state adjustment factor is uniformly applied to all experience rated contributory employers and is not subject to appeal. The state adjustment factor is identified on the Contribution Rate Notice (Form UC657).
Year

Maximum State Adjustment Factor

2012 and prior

1.5%

2013 through 2016

1.0%

2017

0.85%

2018 and subsequent

0.75%

Basic Rate
The basic rate is determined by adding together the Reserve Ratio Factor, Benefit Ratio Factor and State Adjustment Factor.
Solvency Measures and the Trigger Mechanism
The UC Law contains four solvency measures that "trigger" on or off depending on the balance in the UC Fund. Two of the solvency measures apply to employer contribution rates: the Surcharge and the Additional Contributions. The other solvency measures are employee contributions and a reduction in the amount of weekly benefits payable to each claimant.
The solvency measures trigger on when the "trigger percentage" is less than 250 percent and trigger off when the trigger percentage is 250 percent or more.
Based on contribution and benefit activity for 2016, the solvency measure rates in effect for calendar years 2018 through 2022 are as follows:
Solvency measure rates with outstanding UC debt

Target Amount

Rate

Employer surcharge

$100,000,000

5.4%

Employer additional contributions

$225,000,000

0.5%

Employee tax

$166,666,667

0.06%

Benefit reduction

$52,000,000

2.4%

Solvency measure rates with no outstanding UC debt

Target Amount

Rate

Employer surcharge

$138,000,000

7.4%

Employer additional contributions

$310,000,000

0.7%

Employee tax

$230,000,000

0.08%

Benefit reduction

$72,000,000

3.3%

Every five years, the department recalculates the rates so that each solvency measure generates a targeted amount of revenue for each solvency measure as required in the PA UC Law.
Surcharge
The surcharge is added into the contribution rate and determined by multiplying the employer's Basic Rate by the surcharge adjustment percentage applicable for that year. The result of the computation is the "Surcharge Adjustment." The Surcharge Adjustment is identified on the Contribution Rate Notice (Form UC657).
YEAR

SURCHARGE ADJUSTMENT

2008  2012

Positive 5.8%

2013  2017

Positive 5.1%

2018  2020

Positive 5.4%

Additional Contributions
The Additional Contributions component of the overall contribution rate is applicable to all contributory employers (except those subject to newly liable contribution rates). The Additional Contributions is identified on the Contribution Rate Notice (Form UC657).
Year

Additional Contributions

2008  2009

0.25%

2010  2017

0.65%

2018  2020

0.50%

Interest Factor
The Department has determined that the 2020 Interest Factor will be zero (0.0%). This is a reduction from the 2019 interest factor of 0.11 (1.1%). The chart below shows the most recent interest factor percentages by year.
YEAR

Interest Factor

2011

0.44%

2012

0.20%

2013  2019

1.1%

2020

0.00%

Background:
During the most recent recession, the Pennsylvania Unemployment Compensation (UC) Fund became insolvent because the unemployed workers’ needs for UC benefits outweighed the contributions being collected by employers. As a result, Pennsylvania was forced to borrow funds from the federal government to supplement the difference and meet the needs of unemployed workers.
In 2012, Pennsylvania passed a law (Act 60 of 2012), authorizing the Commonwealth to refinance its debt through the issuance of bonds in the private market. This legislation provided several positive results:

The debt to the federal government was satisfied, which allowed Pennsylvania employers to receive full credit for their FUTA contributions.

The interest rate of the bonds was significantly lower than the interest rate charged by the federal government, thus saving employers nearly $50 million over the life of the loan.

The Act established guidelines for repayment of the bonds and interest to ensure fund stability while paying off the debt in the shortest time possible.
The Interest Factor uniformly applies to all contributory employers (except those employers subject to newly liable contribution rates) and is not subject to appeal. The Interest Factor is identified on the Contribution Rate Notice (Form UC657).
Payments attributable to the Interest Factor, like employee contributions, are not credited to an employer's reserve account and are not credited to the employer's experience record for future rate computation purposes. In addition, the Interest Factor is not considered to be a "contribution" for federal certification purposes under the provisions of the Federal Unemployment Tax Act.