Ohio Employers Once Again to Pay More FUTA on 2015 Q4 Tax Returns– November 19, 2015 by Hannah Prengler

As a result ofOhio’s failure to repay outstanding federal loans related to the state’s unemployment insurance, Ohio employers will be unable to claim the maximum state unemployment tax credits on their 2015 federal unemployment tax (FUTA) return. Consequently, employers will experience a rise of up to $147 in FUTA tax per Ohio employee on their 2015 fourth quarter Form 940.

Indiana, Kentucky, New York, North Carolina and South Carolina all repaid their debt during 2015, therefore, employees in these states are no longer subject to a credit reduction.

In addition to Ohio, California, Connecticut and the Virgin Islands were named by the U.S. Department of Labor (DOL) as defaulting on their loans in 2015. Instead of the typical net FUTA tax rate of 0.6%, employers in defaulting areas will pay more, as outlined in the schedule below. Resulting rates are based on the number of years each state has been in default on its unemployment insurance loans.

State Credit Reduction 2015 Maximum
FUTA Tax Per Employee*
California1.5%$147
Connecticut2.1%$189
Ohio1.5%$147
Virgin Islands1.5%$147

*As compared to employers not in credit reduction states, which pay only $42.

We want to hear from you! We encourage you to comment below on this blog post, share it on social media or contact a member of your service team for further discussion.