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New Employers

New contributing employers will have a rate that is the greater of their industry average Unemployment Insurance Contribution rate or 1%. Industry classifications for contributory, experienced employers are used to determine the average industry rates of new employers. Based on the NAICS code for the establishment, this is the employer’s Assigned Industry Rate. This rate will remain in effect until the employer has acquired two years as an experience rate employer. The annual industry rate averages can be found at www.dws.state.nm.us. The NAICS Industry Sector or “NAICS” is the abbreviation for the North American Industry Classification System. NAICS codes are determined based on Keywords that describe your business and your primary business activity. If you believe that your NAICS code does not correspond to the business activity, products, or services provided at your establishment, please contact us via email at  uitax.support@state.nm.us.
 

2017 New Employer Industry Rates

 

Industry Sector Details Industry Rate
11 Agriculture, Forestry, Fishing and Hunting 1.99
21 Mining, Quarrying, and Oil and Gas Extraction 1.76
22 Utilities 1.10
23 Construction 2.56
31-33 Manufacturing 1.94
42 Wholesale Trade 1.59
44-45 Retail Trade 1.44
48-49 Transportation and Warehousing 1.66
51 Information 1.99
52 Finance and Insurance 1.34
53 Real Estate and Rental and Leasing 1.30
54 Professional, Scientific, and Technical Services 1.39
55 Management of Companies and Enterprises 1.34
56 Administrative and Support and Waste Management and Remediation Services 2.01
61 Educational Services 1.37
62 Health Care and Social Assistance 1.44
71 Arts, Entertainment and Recreation 1.55
72 Accommodation and Food Services 1.38
81 Other Services (except Public Administration) 1.27
92 Public Administration (Only available for government entities) 2.82

Experienced Employers

After becoming experienced rated, contribution rates will be set based on the employer’s benefit ratio. The benefit ratio is measured by dividing the employer’s claims experience over the previous three years by the employer’s taxable payroll over the same time period. The resulting benefit ratio is then multiplied by a “reserve factor,” which is set by the Department of Workforce Solutions based on the solvency of the Unemployment Trust Fund. The “reserve factor” can be as low as 0.5 and as high as 4.0. For calendar year 2015, the reserve factor was 4. For Calendar year 2017, the reserve factor will be 2.5264. 

Benefits Charged Against Employer Account (3-year. period)     X  Reserve Factor  X  Experience History Factor

      Employer’s Average Taxable Payroll (3-year. period)

The “reserve factor,” set by the director of the NMDWS Unemployment Insurance Bureau, is:   

                Adequate reserves = 1.0000

                More than adequate reserves = Between 0.5000 and 0.9999

                Less than adequate reserves = Between 1.0001 and 4.0000

The maximum contribution rate is 5.4% and the minimum rate is 0.33%. If your contribution rate calculates at lower than 0.33%, it will be adjusted to 0.33%. If your rate calculates at higher than 5.4%, your contribution rate will be adjusted to 5.4%.

Experience History Factor

The "Experience History Factor" is based on the difference between all of your previous years' tax payments and all the previous years' benefit charges to your account, divided by the average of your annual taxable payrolls for the immediately preceding fiscal years, up to a maximum of three fiscal years. This calculation is then cross-referenced with the table below to determine the "Experience History Factor".

Account Balance ÷ Average Total Taxable Payroll X 100 = "Employer's Reserve"

Reserve History
If an "Employer's Reserve" is: The employer's "Experience History Factor" is:
6.0% and over 0.4000
5.0% - 5.9% 0.5000
4.0% - 4.9% 0.6000
3.0% - 3.9% 0.7000
2.0% - 2.9% 0.8000
1.0% - 1.9% 0.9000
0.0% - 0.9% 0.9500
Under 0.0%

1.0000

The "Experience History Factor" can only affect your account in a positive way, but please also note that there are other factors and considerations that are a part of the overall tax rate calculations.

Excess Claims Premium

The new calculation includes an excess claims premium, which is capped at 1% of taxable payroll. Should your contribution rate exceed 5.4% prior to adjusting the 5.4% maximum rate, an Excess Claims Rate will be added. The Excess Claims Rate is your pre-adjusted contribution rate minus 5.4% and then multiplied by 10%. The Excess Claims Rate cannot exceed 1%. The Excess Claims Premium is then determined by multiplying the Excess Claims Rate by your taxable payroll.

An example will help illustrate the excess claims premium: A hypothetical employer who has high benefit charges relative to payroll will have a high benefit ratio. The benefit ratio multiplied by the reserve factor yields 15.4%. This is the employer’s “real contribution rate.” The difference between 15.4% and 5.4% is 10%. Ten percent of 10% is 1%. Accordingly, the employer in this example is responsible for a 1% excess claims premium in addition to its contribution rate, which would be the maximum rate of 5.4%.

Equation for Total Rate:

Benefit Ratio X Reserve Factor X Experience History Factor = Contribution Rate

Contribution Rate + Excess Claims Rate = Total Rate

For questions please contact the Unemployment Insurance Operations Center via email at uitax.support@state.nm.us or call us at 1-877-664-6984, Monday through Friday, 8:00 a.m. - 4:30 p.m. You can also log in to your account at www.dws.state.nm.us.

 

Rate Calculation and Definitions

Total Rate = Contribution Rate (which is the Benefit Ratio * Reserve Factor * Experience History Factor * 100) + Excess Claims Premium

An estimated amount necessary to have a healthy trust fund with adequate funds for a recession.

The total amount of funds needed in the UI Trust Fund to pay between 18 – 24 months of benefits at an average of the five highest years of benefits paid in the last 25 years.

The total taxable amount paid by an employer to all employees during a 12-month period ending on a computation date.

In the Benefit Ratio, benefits charged to your account for (up to but not exceeding) the last three fiscal years.

Benefit Charges (the last three fiscal years) divided by Taxable Wages (the last three fiscal years).

Pre-July 1, 2016, the Contribution Rate is the Benefit Ratio multiplied by the Reserve Factor multiplied by 100. Per NMSA 51-1-11 of the Unemployment Compensation Law of New Mexico, the minimum tax rate is set at 0.33% and is not to exceed 5.4%. If your contribution rate calculates at lower than 0.33%, it will be adjusted to 0.33%. If your rate calculates at higher than 5.4%, your contribution rate will be adjusted to 5.4%.

Per HB 283, as of July 1, 2016, Contribution Rate is equal to Benefit Ratio multiplied by the Reserve Factor, multiplied by 100, multiplied by the employer’s Experience History Factor.

June 30, YYYY.

Beginning in Quarter 3 of 2016, the Employer’s Reserve is the difference between all of your previous years’ contribution payments and all of the previous years’ benefit charges to your account, divided by the average of your annual taxable payrolls for the immediately preceding fiscal years, up to a maximum of three fiscal years.

Should your contribution rate exceed 5.4% prior to adjusting the 5.4% maximum rate, an Excess Claims Rate will be added. The Excess Claims Rate is your pre-adjusted contribution rate minus 5.4% and then multiplied by 10%. The Excess Claims Rate cannot exceed 1%.

Beginning in Quarter 3 of 2016, the Experience History Factor shall be determined as of the computation date and shall be based on the Employer's Reserve.

A fiscal year begins on July 1st of a year and ends on June 30th of the next year.

The contribution rate assigned to a contributing employer in business for less than 24-months since the last computation date.

It is based on an employer’s business industry (the NAICS code industry sector) and is the average of that industry’s employer’s total contribution rates.

"NAICS" is the abbreviation for the North American Industry Classification System. NAICS codes are determined based on keywords that describe your business and primary business activity.

"NAICS" is the abbreviation for the North American Industry Classification System. The industry sector is the classification of business industries represented by the first 2-digits of the NAICS code.

Your assigned Rate becomes effective as of this date.

A value that represents the health of the Unemployment Insurance Trust Fund and used to calculate a contributing employers’ annual rates.

Reserve Factor is proportional to the difference between the available amount in the trust fund (for benefits as of the computation date) and the Adequate Reserve.

Guidelines:

  • 0.5 to 0.9999 if there is greater than an adequate reserve
  • 1.0 if there is an adequate reserve
  • 1.0001 to 4.0000 if there is less than an adequate reserve

 

Wages subject to contributions reported by you on your quarterly Employment and Wage Detail Reports for (up to but not exceeding) the last three fiscal years.

The annual amount of wages paid by an employer to an employee that are subject to state Unemployment Insurance tax.

All benefit charges attributed to your account during the computation period; this includes charges from an experience transfer.