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If a state has outstanding loan balances on January 1 for two consecutive years, and does not repay the full amount of its loans by November 10 of the second year, the FUTA credit rate for employers in that state will be reduced until the loan is repaid.The reduction schedule is 0.3% for the first year the state is a credit reduction state, another 0.3% for the second year, and an additional 0.3% for each year thereafter that the state has not repaid its loan in full.

This Google™ translation feature, provided on the Employment Development Department (EDD) website, is for informational purposes only.

So, while, employers in states without a further credit reduction will have a FUTA tax rate of .6% (on the first ,000 of wages paid) for the year, employers in states with a further credit reduction due to an outstanding balance of advances will incur a FUTA tax rate of .6% FUTA credit reduction.

In addition, following the third and fifth January 1st with an outstanding Federal advance, employers in those states are potentially subject to additional credit reductions as outlined in FUTA Sections 3302(c)(2).

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