Home > Hot News and Notes

California is now a FUTA credit reduction state

Wednesday, November 23, 2011

California is now a FUTA credit reduction state

As a result of outstanding loan balances, the U.S. Department of Labor has notified the IRS and the EDD that California is now a credit reduction state. (EDD Tax Branch News #156) A credit reduction state is a state that has not repaid money it borrowed from the federal government to pay unemployment benefits.

Due to California carrying an outstanding loan balance for two consecutive years, the FUTA credit will decrease from 5.4% to 5.1% on January 1, 2012, which means California employers will incur a 0.3% FUTA credit reduction.

For more information, please see “Employers facing new FUTA challenges” in the November 2011 issue of Spidell’s California Taxletter®.

Printer Friendly Send to a Friend

This information is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice and assumes no liability whatsoever in connection with its use. Because tax laws are constantly changing, and are subject to differing interpretations, we urge you to do additional research before acting on the information contained in this document.

Original material in Spidell's California Taxes On-Line is copyrighted and may be reproduced for educational purposes or quoted by crediting Spidell's California Taxes On-Line.

Spidell's California Taxes On-Line is operated by Spidell Publishing, Inc., P.O. Box 61044, Anaheim, CA 92803-6144. FAX: (714) 776-9906.

User Agreement By entering this site you agree to the terms of our USER AGREEMENT