FUTA Credit Reduction – Anticipated States and Rates

FUTA Credit ReductionThere are 18 states and one territory (Virgin Islands) that are anticipated to have FUTA credit reductions imposed for 2012 unemployment taxes.  “Credit reduction” states are states that did not repay the funds borrowed from the federal government to pay unemployment benefits and as a result have additional federal unemployment tax due in January with their 2012 quarter 4 returns.

The 18 states projected for 2012 are: Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Indiana, Kentucky, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Rhode Island, Vermont and Wisconsin. This is based on a projection from the Department of Labor.  PCS will send additional notifications after the official list is released at the end of November.

These projected credit reductions would increase the 2012 Federal Unemployment rate by 0.3% for Arizona, Delaware and Vermont (an additional $21 per employee), 0.9% for Indiana (an additional $63 per employee) and 0.6% for the remaining states (an additional $42 per employee).

Employers in credit reduction states would need to calculate the credit reduction as an adjustment to their FUTA tax on their 2012 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.  PCS clients with the Full Tax Service will have debits in January to collect any additional FUTA tax needed for the quarter 4 deposits.

States Reduction Rate
Arizona .003
Arkansas .006
California .006
Connecticut .006
Delaware .003
Florida .006
Georgia .006
Indiana .009
Kentucky .006
Missouri .006
Nevada .006
New Jersey .006
New York .006
North Carolina .006
Ohio .006
Rhode Island .006
Vermont .003
Virgin Islands .006
Wisconsin .006


Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.


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