Virginia unemployment claims normalize after pandemic with tax changes for businesses

Virginia's unemployment insurance system is set for a significant adjustment in 2025, as the average tax per employee is projected to decrease from $71.24 in 2024 to $53.60, with the elimination of the pool tax. This change comes as unemployment claims have stabilized following the economic disruptions caused by the COVID-19 pandemic, marking a return to pre-pandemic levels.

During a recent meeting of the Commission on Unemployment Compensation, officials highlighted the positive trend in unemployment claims, which have normalized after peaking at over 1 million in 2020. Current annual claims are now consistent with figures from 2017 to 2019, averaging between 130,000 and 140,000 claims per year. The data indicates three consecutive years of stable claim activity, although a slight increase in the first quarter of 2025 may suggest minor economic adjustments.

Additionally, the Virginia General Assembly approved a revenue-neutral administrative fee during the 2024 session to support the operations of the unemployment agency. This fee was balanced by a corresponding reduction in employer taxes, ensuring that businesses do not face additional financial burdens. To date, the agency has collected over $10.6 million from this funding, which is expected to enhance its fiscal sustainability and operational resilience.

These developments reflect a concerted effort by state officials to support both businesses and unemployed individuals as Virginia navigates the post-pandemic economic landscape. The adjustments in unemployment insurance taxes and the stabilization of claims are poised to foster a more resilient labor market moving forward.