After years of recovery from the Great Recession and increasing FUTA taxes due from employers in California, the golden state has finally met the key condition needed to avoid FUTA credit reductions: no outstanding Title XII loans on November 10th 2018. The USDOL has published the official notice and credit reduction information, which may be viewed here:

https://oui.doleta.gov/unemploy/futa_credit.asp

The net FUTA tax rate in California (after offset) for 2018 will go down from the 2017 rate of 2.7% (which includes the 2.1% credit reduction) to the regular 0.6% on $7,000 base (a reduction from $189 per employee to $42 per employee).

This leaves only the Virgin Islands with an outstanding Title XII debt and a FUTA tax that will continue to increase with the offset credit reductions that apply. The Virgin Islands net FUTA tax will be increased from 2.7% to 3.0% on the $7,000 tax base. The 2018 Virgin Islands tax per employee will now be significantly higher than any other state at approximately $210 per employee.

The substantial reduction in FUTA taxes due on employers in California will provide relief in cash flow as employers pay 2018 FUTA taxes before January 31, 2019.

Source: UWC – Strategic Services on Unemployment & Workers’ Compensation, 11/14/2018