FUTA Credit Reductions Released

November 30, 2015

Employers in eight states (Ohio is one of them) and the U.S. Virgin Islands will pay an increased 2015 FUTA tax rate in January 2016, due to unpaid federal loans. See the below table for a full list.

The FUTA tax rate is 6%, but employers receive a 5.4% credit for state unemployment insurance paid, which makes the effective FUTA tax rate 0.6 %. However, part of the credit is reduced when state funds are depleted and federal loans to the state are not repaid within 2 years. As a result of the credit reduction, FUTA tax typically increases by 0.3%, or $21 per employee for the year. The credit is further reduced each year by 0.3% until the loans are repaid.

Below is the Ohio Information (other states may be viewed on the U.S. Department of Labor web site):

Normal FUTA Rate = .6%

FUTA Credit Reduction = 1.5%

Total 2015 FUTA RATE = 2.1%

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