The U.S. Department of Labor has confirmed the FUTA credit reduction states and rates for tax year 2015. All employers that are subject to FUTA tax and that paid wages in these jurisdictions are affected and will see an increase in FUTA taxes.
If your company currently operates in one or more of the states referenced below, you will pay higher FUTA taxes per employee for the 2015 tax year. The chart below explains the potential impact on your FUTA tax liability reported on your 2015 IRS Form 940, which is due on or before February 1, 2016.
|
State
|
2015 Credit Reduction Rate
|
2015 BCR Add-On
|
Total 2015 FUTA Credit Reduction Rate
|
Additional FUTA Tax Due in January (Per Employee
|
|
California
|
1.5%
|
0.0%
|
2.1%
|
$105
|
|
Connecticut
|
1.5%
|
0.6%
|
2.7%
|
$147
|
|
Ohio
|
1.5%
|
0.0%
|
2.1%
|
$105
|
Additional FUTA tax liability listed above is based on the $7000 FUTA taxable wage limit
It is important to plan now for the funding of this additional tax liability. Your account will be debited on January 25, 2016. If your funding method is direct or reverse wire, it is imperative that funds are wired or available for debit by the due date referenced on your ADP invoice.
Please note that Indiana, Kentucky, New York, North Carolina, and South Carolina are no longer subject to the additional FUTA rate.
For additional information regarding FUTA Credit Reduction visit: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/FUTA-Credit-Reduction.