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California on track for FUTA credit reduction

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in Office Management,Payroll Management

California is the last state standing from the 2008 economic downturn to be liable for a FUTA reduction, since it has yet to repay loans it took out to shore up its unemployment trust fund. Worse: It’s also in line for a 0.1% benefit cost ratio add on (the BCR add-on), which reduces the FUTA credit further. Bottom line: Employers in California can expect to pay 2.8% in FUTA taxes for 2017, unless the state can negotiate a reduction to the BCR add-on.

FORESIGHT IS 20/20: If you’re in California, it’s prudent to plan for the reduced credit by increasing your third- and fourth-quarter FUTA deposits to account for this increase.

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