The U.S. Department of Labor released the listing of FUTA Credit Reduction States for 2017. The standard FUTA rate is 6.0 percent on the first $7,000.00 of wages. Employers in most states will receive a credit of 5.4 percent against the rate, resulting in net tax rate of 0.6 percent; however, California and the Virgin Islands had loans with the Federal Unemployment Trust Fund that were still outstanding. As a result, these states will have their FUTA credit amount reduced for 2017 filing as a way to recover the funds still owed to repay these loans.
Employers in the following states and jurisdictions will have their credit reduced from 5.4 percent to 3.3 percent for 2017 making the FUTA tax rate 2.7 percent:
- Virgin Islands
The FUTA credit reduction only applies to employers who pay SUI wages to California and the Virgin Islands All other employers will receive the full FUTA credit of 5.4 percent.
The following is a summary of all states with a 2017 credit reduction and their net FUTA rate:
State Credit Reduction Percentage Maximum Tax Increase Per Employee 2017 Net FUTA Rate
California 2.1% $147.00 2.7%
Virgin 2.1% $147.00 2.7%
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