With the 2026 Legislative Session approaching, MACo is profiling major issues, including unemployment insurance, that stand to garner significant attention. Maryland’s Unemployment Insurance system remains solvent for now, but projections show that stability may be short-lived.
As previously covered in a MACo deep dive, the federal-state unemployment insurance (UI) system offers temporary financial support to individuals who have lost their jobs, helping to replace a portion of their income while they search for new employment. Established in 1935, this system functions as a social safety net, where employers pay taxes into a fund that provides income assistance to workers who become unemployed. Additionally, the UI system helps maintain consumer spending during economic downturns by ensuring that families continue to have money to spend.
In Maryland, the UI program is administered by the Maryland Department of Labor using BEACON, the Maryland Division of Unemployment Insurance (Division) online UI system. The weekly benefit amount in Maryland ranges from $50 to $430, and claimants may receive up to 26 weeks of UI benefits. UI benefits are subject to federal and state taxes. A claimant may choose to have federal tax (10%), Maryland state tax (7%), both, or no taxes withheld from the claimant’s UI benefits. Employers are considered contributory or reimbursable for unemployment insurance (UI) tax purposes. Contributory employers pay quarterly UI taxes based on benefit charges and taxable wages. Reimbursable employers (state and local government entities and specific non-profit organizations) may reimburse the state for benefits charged against their account instead of paying quarterly UI taxes.
From the Issue Papers, page 136 of the pdf:
According to the U.S. Department of Labor’s (USDOL) most recent data for 2024, Maryland had an AHCM of 1.08 and continued to meet the federal benchmark with a UITF balance of $1.93 billion. Notably, however, 2025 projections from Md Labor suggest that the UITF will fall below a 1.0 AHCM as early as 2026 or 2027 if no legislative action is taken to address a potential decline in the UITF balance. The cause of the decline, according to Md Labor, may be attributable to a number of factors, such as an increase in the unemployment rate to a historically normal rate, increases in average weekly benefit amounts caused by inflation, and a fixed taxable wage base. Additionally, as described above, approximately $33 million is expected to be diverted from the UITF to the SAEF each year under recent legislation.
This data underscores that while Maryland’s Unemployment Insurance Trust Fund remains stable today, its margin for error is narrowing. The minimum solvency level or average high-cost multiple (AHCM) refers to the ability of the trust funds to pay 100 percent of currently scheduled benefits. An AHCM of 1.08 meets those recommendations, but projections showing a potential drop below the federal solvency benchmark within the next two years highlight underlying structural imbalances.
From the Issue Papers, page 136 of the pdf:
Legislation has been introduced in several consecutive sessions to address a potential decline in the AHCM through an increase in the taxable wage base. Additionally, those measures have to varying degrees sought to increase the weekly benefit amounts, the dependent allowance, and the income disregard threshold, including by indexing the amounts to wage growth and inflation.
As previously covered by MACo, the General Assembly has proposed legislation that has failed to pass in recent years to modernize the State’s unemployment trust fund by increasing employer contributions and raising the taxable wage base. MACo opposed a similar proposal in 2024 that sought to double the minimum and maximum weekly benefits range used to determine weekly benefit amounts. While counties do not contribute directly to the Unemployment Insurance Trust Fund, the proposal would have significantly increased the benefits counties are required to pay, creating a substantial fiscal burden. Similar legislation was proposed in 2025, and it is anticipated to be proposed again in 2026.