Final 2023 FUTA Credit Reduction States Published

At A Glance

• The US Department of Labor (DOL) has published the final 2023 FUTA credit reduction states. 
• The credit reduction states/territories are California, New York, and the Virgin Islands (USVI).
• You can view the DOL website for more information at: FUTA Credit Reductions, US Dept of Labor.

Final 2023 FUTA Credit Reduction States

Five states faced a potential FUTA credit reduction in 2023: California, Connecticut, Illinois, New York, and the Virgin Islands. Connecticut and Illinois repaid their outstanding advances before November 10, 2023; thus, avoiding a FUTA credit reduction.

California and New York had outstanding advances on January 1 for 2021, 2022, and 2023 and did not repay their advances before November 10, 2023. Therefore, employers in these states face a 0.6% credit reduction.

The US Virgin Islands (USVI) had an outstanding advance on January 1 from 2010 through 2023 and did not repay the advances before November 10, 2023. Therefore, employers in the USVI face a 3.9% credit reduction.

Next Steps

Paylocity will apply this update to all applicable 2023 Forms 940.

To review the full scope of the DOL announcement, visit: FUTA Credit Reductions, US Dept of Labor.

Thank you for choosing Paylocity as your Payroll Tax partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, tax attorney, or tax advisor.