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Employers in two jurisdictions are to pay higher payroll costs for 2017 because of Federal Unemployment Tax Act credit reductions, unchanged from 2016, the Labor Department said Nov. 13 in a credit-reduction assessment list.
Employers are assessed a higher federal unemployment tax rate than the standard effective rate of 0.6 percent on wages paid for work performed in or otherwise attributable to credit-reduction jurisdictions because the tax credit they can apply on such wages is less than the maximum credit of 5.4 percent.
California and the U.S. Virgin Islands each are to have a general FUTA credit reduction of 2.1 percent, causing employers in these jurisdictions to be assessed an additional federal unemployment tax cost of up to $147 for each employee for 2017.
An extra credit reduction, the benefit-cost rate (BCR) add-on, could have been in effect for the U.S. Virgin Islands for 2017, but the federal Labor Department approved the jurisdiction’s application for relief from the add-on. Approval of the relief allowed employers in the U.S. Virgin Islands to avoid a BCR add-on of 1.1 percent, a cost of up to $77 for each employee.
The Labor Department also approved California’s BCR waiver application, though the state did not have a potential BCR add-on for 2017, the department said.
Increases to unemployment-taxable wage bases for 2018 were acknowledged by 11 states: Colorado, Iowa, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Vermont, and Washington.
These states are to decrease unemployment-taxable wage bases for 2018: Arkansas, Delaware, New Mexico, Oklahoma, and Wyoming.
Washington’s 2018 wage base, $47,300, is to be the highest unemployment wage base ever applied.
In the accompanying wage base comparison chart, changes for 2018 are in bold. Wage bases that decreased are in bold italic.
|Dist. of Columbia||9,000||9,000|
|Rhode Island||22,400; 23,9002||*|
* Wage bases to be announced.
1 For each year when Michigan’s unemployment trust fund balance was sufficiently high during the previous year, Michigan employers not delinquent in paying unemployment-related amounts are assigned a reduced taxable wage base.
2 Experienced Rhode Island employers that are assessed the maximum unemployment tax rate are assigned a higher wage base.
3 Tennessee’s wage base may change July 1 if the state’s unemployment trust fund balance Dec. 31 and then June 30 each are at a level that would require a wage base change.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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