Search
 

Unemployment Taxes Rise

20 states see federal tax rate increase this year.

By Susan Kelly | Updated on January 16, 2012

The unemployment insurance benefits states have been providing to workers during the recession are likely to haunt businesses in the form of higher unemployment insurance taxes for years to come. Such taxes have already begun to rise and are projected to rise again this year, although some states have taken steps to mitigate the increases.

Employers pay both federal and state unemployment insurance taxes. The Federal Unemployment Tax (FUTA) is nominally 6%, but it’s offset by a 5.4% credit, making the effective tax rate 0.6%. That credit is reduced, though, if states have borrowed from the Federal Unemployment Account to pay benefits, as many have. The Labor Department shows that the Federal Unemployment Account was owed a total of $37.5 billion as of Jan. 12 by 27 states and the U.S. Virgin Islands, with California’s $10.1 billion representing about a quarter of that debt. Other states with big IOUs include New York with $3.5 billion, Pennsylvania with $3.3 billion and North Carolina with $276 billion.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.