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Chargeable Benefits Component (CBC)

Chargeable Benefits Component (CBC)

Unemployment insurance, like any insurance system, uses past experience to establish an employer’s tax rate.

Based on that experience, a tax rate is established for an employer. The tax rate is made up of three components which are calculated separately and then added together to make up the yearly tax rate: the Chargeable Benefits Component (CBC); the Account Building Component (ABC); and the Nonchargeable Benefits Component (NBC). 

This component takes into consideration the amount of unemployment benefits charged to an employer's account over a 36-month (3-year) period, ending the previous June 30.

  • For example, the 36-month period used to compute the tax rate for the calendar year (as shown on the tax rate notice mailed in December) would have been the 36-month period ending June 30.
    • This amount is then divided by all of the taxable payroll during that same 36-month period.  Taxable payroll is the first $9,000 (for qualified employers) of each covered employee’s wages paid during the year unless a reduction is calculated.

The Chargeable Benefits Component (CBC) is figured like this:

CBC = 36 months of benefits paid ÷ 36 months of taxable payroll

 

The result is rounded to the next higher 0.1%. The Chargeable Benefits Component can range from 0 to 6.3%.