FUTA Credit Reductions Update

As noted by BNA, this year brings an unprecedented event to Connecticut employers.  They will enjoy the dubious distinction of having the highest FUTA (Federal Unemployment Tax) rate in history.

Here’s how this happened:  Connecticut employers will pay the standard FUTA rate of .6% (assuming compliance with all other rules).  In addition, they will pay a 1.5% credit reduction rate for un-repaid advances, bringing the employer rate to 2.1%.  Finally, Connecticut employers will have to pay an additional .6% so-called BCR add-on credit reduction.  See below for the reasoning, and follow this link to read the full article from BNA.

Connecticut employers are to be assessed a BCR add-on for 2015 because the state had a federal unemployment loan balance on Jan. 1 of at least five consecutive years and the state did not apply for relief from the BCR add-on.

Some states will escape the credit reduction costs for 2015.  Indiana, Kentucky, New York and North Carolina will have no credit reductions for 2015.

If you are an employer, verify your actual FUTA rate before December 15, so that you can make any additional FUTA deposits timely before the end of the year.

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