‘Tis the season: The Dept. of Labor has announced the possible 2016 FUTA credit reduction states.
Once again, the FUTA tax rate is 6.0%. If you apply the regular credit of 5.4%, you get a net rate of 0.6%.
But certain states that have outstanding federal loans for their unemployment insurance trust funds will pay more than 0.6%.
Here are the affected states, with the potential credit reduction rate in parenthesis, followed by the final FUTA tax rate:
- California: (2.2%) 2.8%
- Connecticut: (1.9%) 2.5%
- Ohio: (2.1%) 2.7%, and
- Virgin Islands: (3.1%) 3.7%.
Note: If Connecticut and Ohio have a zero loan balance on Nov. 10, 2016, as expected, that’ll bring the tax rate back down for employers.
We’ll keep you posted on the final numbers.