California, Virgin Islands at Risk of 2026 FUTA Credit Reduction

California and the US Virgin Islands could receive Federal Unemployment Tax Act credit reductions for 2026, according to a publication released by the federal Labor Department’s Employment and Training Administration.

If California receives a credit reduction for 2026, the credit reduction amount would be 1.5%, or 5.3% if a benefit-cost rate add-on is applied, according to the publication. The department can include a BCR add-on for states that have had an outstanding federal unemployment loan balance as of Jan. 1 for at least five consecutive years. However, the department can waive the BCR add-on.

A 1.5% FUTA credit reduction ...