:::: MENU ::::

California Facing Potential 2023 Credit Reduction

  • Posted
  • Aug 15, 2023
What's New

California Facing Potential 2023 Credit Reduction

The U.S. Department of Labor (DOL) recently updated the outstanding loan balances within state/territory Federal Unemployment Accounts (FUAs). As of August 10, 2023, California, New York, and the U.S. Virgin Islands carry balances in their FUA loans. California’s outstanding balance was $17.9 billion US dollars, while New York’s balance was $6.5B USD (source USDOL).

If these states still have unpaid loans on November 10, 2023, employers within these states have additional FUTA credit reductions in 2023. States that have an outstanding FUA loan on January 1 of at least two consecutive years and on November 10 of the second year, the states are subject to a credit reduction on their Federal Unemployment Tax rate until the loan has been paid off. If a loan continues to be unpaid on subsequent years, the credit reduction increases by 0.3%. States that make an effort to keep their balances in check have some opportunities to avoid the reduction fee. If California continues to have an outstanding balance, the reduction increases to 0.6%, and the supplementary FUTA tax would be due by January 31, 2024.

OCCAPA: Network. Learn. Succeed.