A strong economy in California has allowed the state to finally pay off its federal unemployment insurance loans. This means that the state federal unemployment tax (FUTA) rates should go back to the minimum rates by the end of 2018.
The U.S. Department of Labor recently announced that employers in the state of California and in the Virgin Islands will pay their Federal Unemployment Tax Act, or FUTA, taxes for calendar year 2016 at a higher tax rate than employers in other states.
Being an employer in California is a challenging venture. And managing the costs involved in hiring employees can seem prohibitive, as well. With increased family leave, paid sick leave, and other costly benefits - not to mention an ever-increasing minimum wage scale - it is a daunting task to make a business cost effective and profitable.
Employers in four jurisdictions are likely to see Federal Unemployment Tax Act credit , or FUTA, reductions for 2016, according to the U.S. Labor Department.
It's a sobering reality in California: labor law requires that the FUTA tax rates will continue to increase. The projection of increases through 2018 is also a sobering reminder of the fiscal state of California.