New tax increase affects Hoosier businesses

INDIANA (WTHI) - A new tax increase will hit Hoosier businesses this month. And that's bad news for business owners.

It means a little more money out of the owners pocket. And it could mean a little more money out of the workers pocket.   

The Federal Unemployment tax starts this month.   

Indiana borrows money from the federal government in order to continue paying unemployment claims.   

Displaced workers file unemployment claims for temporary help while getting a new job.  

The problem is, the state has borrowed too much money. And now the government wants it back. To get that money, enter the federal unemployment tax.   

So what does this mean for Indiana's business owners?   

They will have to pay more money per an employee. And that money needs to equal more than a billion in debt.   

Until the state complies with a repayment plan on that debt, Each employer's taxes increases by $63 per employee, per year, until the debt is fully paid back.   

That's a higher rate than any other state.   

Some businesses with more employees, and larger payrolls, have even been forced to borrow money simply to meet the increased tax burden.   

The state's Department of Workforce Development said it's working to avoid higher premiums in the future.

"It appears from our projections that Indiana employers will see that increase in taxes capped at $63 per employee for the remainder of the life, until the loan is paid back,” said Randy Gillespie, Indiana Department of Workforce.   

Without Indiana's help, worker taxes could go up to $84 per person.   

Small business owners say that could flatline their business.