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 This week the Department of Labor announced the FUTA credit reduction states which included Ohio. Ohio’s FUTA credit has been reduced by 1.2% retroactive for the entire year 2014, increasing the FUTA rate for Ohio employers from 0.6% to 1.8% on the first $7,000 of employee wages.  This is an increase from $42 per employee to $126 per employee.

Under the joint federal/state unemployment insurance system, states with a high rate of unemployment and difficulty meeting their benefit obligations can borrow money from the FUTA Account to pay benefits. If a state has outstanding loan balances on January 1 for two consecutive years, and does not repay the full amount of its loans by November 10 of the second year, the FUTA credit rate for employers in that state will be reduced until the loan is repaid, with the extra FUTA taxes paid being applied against the state’s outstanding loan balance.  Each year the loan remains unpaid, the credit reduction increases by 0.3%; this is Ohio’s fourth year with a loan balance unpaid.  The FUTA credit-reduction tax liability is due in January.

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