November 24, 2014

2014 FUTA Credit Reduction States

Related Service Tax & Business

2014 FUTA Credit Reduction States Tax & Business

The U.S Department of Labor (DOL) released its list of FUTA credit reduction states for 2014.

The standard FUTA rate is 6.0 percent on the first $7,000.00 of wages. Employers in most states receive a credit of 5.4 percent against the rate resulting in net tax rate of 0.6 percent. However, states with federal loans outstanding for two consecutive years must make additional payments to FUTA. As a result, these states will have their FUTA credit amount reduced for 2014 filing as a way to recover the funds still owed to pay back these loans.

Instead of the standard 5.4% credit allowed, employers in 7 states and the Virgin Islands will have a reduced credit for 2014. The following is a summary of all states with a credit reduction and their net FUTA rate for 2014:

State Credit Reduction Percentage Net 2014 FUTA Rate
California 1.2% 1.8%
Connecticut 1.7%
(includs Benefit Cost Ration add on of 0.5%)
2.3%
Indiana 1.5% 2.1%
Kentucky 1.2% 1.8%
New York 1.2% 1.8%
North Carolina 1.2% 1.8%
Ohio 1.2% 1.8%
Virgin Islands 1.2% 1.8%

The credit reduction only applies to employers who pay SUI wages to the states listed 1.8% above. All other employers will receive the full FUTA credit of 5.4%.