FUTA tax bill spikes for employers in 20 states

December 9, 2011 by Kerry Isberg

Come Jan. 31, employers in 20 states (plus the Virgin Islands) must deposit higher-than-usual Federal Unemployment Tax Act (FUTA) taxes with their Form 940, Employer’s Annual Federal Unemployment (FUTA) tax return.

That’s because with high jobless rates, many states’ unemployment insurance trust funds were depleted. To continue paying benefits to those out of work, many states took on federal loans.

When some states couldn’t pay them back for at least two years, by the repayment deadline of Nov. 10, 2011, they became what’s known as “credit reduction states.” The associated, additional FUTA tax escalates annually, generally 0.3% per year, until states repay their loans.

You’ll find the complete article and a list of the credit reduction states here.