Higher FUTA taxes coming down the pike — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Higher FUTA taxes coming down the pike

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in Small Business Tax

Normally,  the federal government requires employers to pay FUTA tax at a 6.0% rate on the first $7,000 of annual wages for each covered employee. This 6.0% tax may be offset by credits of up to 5.4%, so the net FUTA tax rate is usually only 0.6%. However, if a state borrows funds from the federal government to pay unemployment insurance (UI) benefits and defaults on repayment, the UI tax credits for employers in that state are reduced.

Currently, the following 15 states face credit reductions this year unless they can repay their outstanding federal UI loans by the Nov. 10, 2014, deadline: Arkansas, California, Connecticut, Delaware, Georgia, Indiana, Kentucky, Missouri, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina and Wisconsin.

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