Oregon unemployment insurance and paid leave tax rates remain ...

Rates that new employers will pay for unemployment insurance in the coming year will be 2.4% on up to $54,300 in wages per employee.

New employers in Oregon will pay the same rate for unemployment insurance in the new year — 2.4% — as they did in 2024, according to the state employment department.

Businesses open for a year or more pay a variable rate, but will remain in the same tax schedule for 2025 as they were in last year. Employers pay unemployment insurance payroll tax up to a certain income level per employee, which is rising slightly from $52,800 in wages to $54,300.

These payroll taxes that Oregon employers pay go into the state’s unemployment trust. The state determines the employer rate each November based on the previous year’s demand for the fund. The trust is used to pay weekly benefits to Oregonians who lose their jobs through no fault of their own.

“Oregon’s self-balancing unemployment insurance trust fund is one of the healthiest in the country,” Oregon Employment Director David Gerstenfeld told reporters in November, “Which means employer tax rates remain lower when there are strains on the unemployment insurance system.”

Gerstenfeld points to the pandemic when Oregon didn’t raise taxes or borrow money to stabilize the unemployment insurance trust fund — a step most states had to take when closures due to COVID-19 resulted in a wave of layoffs.

The trust fund also earns interest, which Gerstenfeld said amounted to more than $125 million in 2023 and more than $80 million in 2024.

“All of this means that Oregon’s Unemployment Insurance Trust Fund is solvent and is ready for whenever the next recession comes,” he said.

The unemployment insurance tax rate has bounced around in the last few years. In 2021 it ticked up, then was lowered in 2022, and went up slightly in 2024.

One thing contributing to the continued rate for 2025 is the stable unemployment rate in the state. It’s hovered around 4% for more than a year, meaning no surge in benefit recipients tapping into the trust fund. The unemployment rate is historically low, but has ticked up a little bit from summer 2023.

“It is rare by historical standards for Oregon’s unemployment rates to be at or below 4.5%,” State Employment Economist Gail Krumenauer told reporters in December. “The only times that’s happened since 1976 has been for a couple of months in the mid 1990s, for a couple of years leading up to the pandemic recession — and now for the most recent couple of years.”

Employers also pay into the state’s Paid Leave Oregon Trust Fund, and unlike unemployment insurance, employees - as well as employers — contribute to the fund.

The fund covers employees who need to take up to 12 weeks of paid leave for family, medical or “safe leave” — the program’s term for people needing leave to escape domestic or sexual violence. Workers taking paid time off for pregnancy may be eligible for up to 14 weeks of leave.

Things that qualify under the program include time off to recover from illness or to care of a family member, leave to bond with a new child, and for victims of sexual or domestic violence and stalking to find the help they need.

In 2024, 1% of an employee’s gross pay up to $132,900 was sent to the fund. Employees paid 0.6% and employers contributed 0.4%. The rate and breakdown will stay the same in 2025 on gross pay up to $176,100.

Starting in January, Oregonians will be able to apply for an additional type of family leave to support parents preparing to adopt or foster a child. Oregon lawmakers made the change in the 2024 legislative session so that certain appointments and other tasks can also be covered by the state program.

“Pre-placement leave is designed for people who are actively in the process of adopting or fostering a new child into their home,” Karen Madden Humelbaugh, director of Paid Leave Oregon, said. “Eligible employees can take this type of leave for pre-placement activities such as counseling sessions, court appearances, legal consultations, physical examinations, home studies, and related travel to another state or country.”

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