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FUTA Credit Reduction States Released for 2022

November 11, 2022

The US Department of Labor announces 2022 FUTA credit reduction states.

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At a Glance

  • The US Department of Labor announced 2022 FUTA credit reduction states.
  • Virgin Island employers will pay FUTA taxes at a rate higher than employers in other US states and American territories.

2022 FUTA Credit Reduction States

Nine states and one jurisdiction faced a potential FUTA credit reduction in 2022. However, five of these states repaid their outstanding advances before November 10, 2022, thereby avoiding a FUTA credit reduction.

The US Department of Labor announced that employers in the four states on the following table had an outstanding advance on each January 1, from 2021 through 2022, and did not repay their advances before November 10, 2022. Employers in these four states face a 0.3% credit reduction. Additionally, employers the Virgin Islands will pay their FUTA taxes for calendar year 2022 at a higher federal unemployment (FUTA) tax rate than employers in other states because they failed to repay their outstanding federal unemployment insurance (UI) loans by November 10, 2022.

This is the final list as published by the US DOL:

State FUTA Credit Reduction Additional Cost / Employee
California 0.03% $21.00
Connecticut 0.03% $21.00
Illinois 0.03% $21.00
New York 0.03% $21.00
Virgin Islands 3.6% $252.00

Source: US Department of Labor

Next Steps

Paylocity will calculate the additional amount of FUTA tax due during the year-end tax filing process and debit client accounts accordingly to cover any additional funds due.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner.

This information is provided as a courtesy, it 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 Advisor.

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