2025 Minnesota Unemployment Insurance Tax Rate Increase: What Employers Need to Know

Minnesota employers will see a change in their unemployment insurance (UI) tax rates starting in 2025. This increase is part of the state’s efforts to replenish the UI trust fund after significant pandemic-era claims and ensure long-term stability of the system.

What’s Changed?

• Base UI Rate increased from 0.1% to 0.4% in 2025.

• Experience-rated employers may now see rates ranging from 0.4% to 8.9%, depending on:

  • Claim history

  • Size of payroll

  • Industry classification

The increase affects nearly all employers in Minnesota and could result in higher payroll costs—especially for businesses that experienced significant layoffs or turnover in prior years.

How This Impacts Your Business

If your business is subject to Minnesota’s unemployment insurance taxes, your rate is recalculated each year based on your individual experience rating. The Department of Employment and Economic Development (DEED) mails updated rate notices each December.

Key considerations:

• Companies with fewer unemployment claims may still see an increase due to the higher base rate.

• Businesses with high turnover or a history of layoffs may be at or near the new maximum rate.

What Employers Should Do

1. Review your 2025 UI rate notice sent by DEED in December 2024.

2. Evaluate employee retention strategies to help manage your experience rating long-term.

3. Factor increased UI costs into your payroll and hiring budgets.

4. Double-check classification codes — an incorrect NAICS code can lead to overpayment.

Tip: File Quarterly Reports Promptly

Filing wage detail reports on time and paying UI taxes quarterly helps avoid penalties and ensures accurate reporting that supports your experience rating.

If you're unsure how the rate change affects your bottom line or want to verify you’re classified correctly, we’re happy to assist.

Reach out to our team for a UI tax review or payroll planning support.