ETS Tax Intelligence: 2015 FUTA Tax Rate Outlook
The “Great Recession” continues to impact FUTA tax rates in 2015 as evidenced by the five states that continue to borrow from the federal government in the form of “Title XII” loans. The federal government offers states the ability to borrow when their unemployment trust funds are depleted and they are unable to pay unemployment benefits to claimants. Outstanding Title XII loans currently exceed $6.6 billion (excluding accrued interest).
FUTA Rate Impacts
While the net FUTA tax rate is typically 0.6% (6.0% less a 5.4% credit for timely state unemployment tax payments) on the first $7,000 of wages, employers in the five states with continued Title XII borrowings are potentially subject to loss of a portion of the 5.4% credit. The potential loss of the credit can occur by application of: the “FUTA credit reduction,” the “2.7% add-on,” and/or the “BCR add-on.” See the January 2014 issue of ETS Tax Intelligence for a detailed explanation of each.
The table below lists the states potentially facing a FUTA credit reduction and a BCR add-on in 2015, according to the U.S. Department of Labor.
Monitoring FUTA credit reductions is important to ensure proper budgeting and accrual of FUTA taxes. Employers may contact Pete Krieshok at (314) 214-7325 or via email at firstname.lastname@example.org, or visit our corporate blog at insight.equifax.com for information on this and other employment tax matters that can impact your organization.
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