FUTA Credit Reduction for 19 States

January 11, 2013 | By SBS Payroll, Inc. 0 Comments

The 2012 FUTA Tax Credit has been reduced for several states resulting in higher FUTA Tax Rates for employers in those states.

The impact of this Federal action on our payroll clients is that employers in the affected states will likely owe additional FUTA taxes for the 2012 tax year.

State – Credit Reduction

  • Arizona 0.3%
  • Arkansas 0.6%
  • California 0.6%
  • Connecticut 0.6%
  • Delaware 0.3%
  • Florida 0.6%
  • Georgia 0.6%
  • Indiana 0.9%
  • Kentucky 0.6%
  • Missouri 0.6%
  • Nevada 0.6%
  • New Jersey 0.6%
  • New York 0.6%
  • North Carolina 0.6%
  • Ohio 0.6%
  • Rhode Island 0.6%
  • Vermont 0.3%
  • Virgin Islands 1.5%
  • Wisconsin 0.6%

FAQs:

  • Why did this happen?
    A portion of FUTA (Federal Unemployment Tax) was previously waived for states with a good credit rating with the Federal Government. That tax credit has been reduced for states that have not maintained their credit rating meaning a higher percentage of taxable wages has been put into place for these states. A listing of the states affected for 2012 and the corresponding credit reduction rate has been placed above.
  • Will my employees owe additional taxes?
    As this is an employer only tax, none of your employees will be affected by this change.
  • If I have employees in the states listed, how much will I owe?
    The additional tax amount SBS clients may owe is being calculated with the reconciliation of the 2012 tax year, and we will notify our clients of any additional amounts due.
  • Where can I find more information?
    For additional information about the FUTA Tax Credit Reduction, please visit the IRS FAQs page on this topic at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/.



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