Labor Department Announces Potential 2025 FUTA Credit Reductions

California, Connecticut, New York, and the US Virgin Islands could be subject to Federal Unemployment Tax Act credit reductions for 2025, according to a publication released by the federal Labor Department’s Employment and Training Administration.

If California, Connecticut, or New York receive a credit reduction for 2025, the credit reduction amount would be 1.2%, and employers in these states would pay an effective federal unemployment tax rate of 1.8%, according to the publication. Employers in these states would consequently pay up to $126 per employee in FUTA tax when applied to the federal unemployment-taxable wage base of $7,000.

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