Important Notice to Wisconsin Employers:
Reduction in Federal Unemployment Tax Credit
Taxable employers are subject to a federal unemployment tax (FUTA), which is currently 6.0% of the first $7,000 of employee earnings. FUTA allows a 5.4% tax credit for employers in good standing with their state unemployment program, so most employers have a net FUTA rate of 0.6%.
Due to the loan balance of the UI Trust Fund, employers have not qualified for the full FUTA tax credit since 2011. The additional federal tax revenue generated by reductions in the tax credit has been used to pay down the federal loan balance.
If all loans are paid off as projected, employers will again have the full FUTA tax credit:
- The effective FUTA tax rate for 2014, payable January 2015, will return to 0.6% on the first $7,000 of employee's wages.
Questions can be directed to the IRS Business and Specialty Tax Line at (800) 829-4933. The 2013 Federal Employer's Annual Federal Unemployment (FUTA) Tax Return (Form 940 Instructions) is available at: http://www.irs.gov/pub/irs-pdf/i940.pdf
The above information on FUTA is subject to changes in federal law. UI will update employers annually.