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2013 Federal Unemployment Tax Act (FUTA) State Credit Reductions and Rates.  Federal law provides for a reduction in the amount of FUTA credit employers may take when a state has outstanding federal loans for two or more years.  For the 2013 tax year, this credit reduction is applicable to 14 states.  If your company currently operates in one or more of the states referenced below, you will pay higher FUTA payments per employee for the 2013 tax year, resulting in a net increase in your FUTA taxes due.  It is important to review the chart below because this will affect your form 940 and could result in penalties and interest if not filed correctly on or before January 31, 2014.



2013 Credit Reduction

Maximum Tax Increase Per Employee




Arkansas     California     Conneticut     Georgia     Kentucky     Missouri     New York     North Carolina     Ohio     Rhode Island     Wisconsin



Indiana, Virgin Islands



As part of the services we provide to our payroll clients, we will deduct the additional FUTA amounts due from your account and file form 940 on your behalf.  The above-referenced information may allow you to estimate the FUTA credit amount that will be due in addition to your quarterly deposit.  As the tax year progresses and additional information becomes available, further communications will be provided.