FUTA Credit Reduction States

Employers are entitled to a FUTA credit if they paid unemployment taxes to a state government.  The FUTA credit is built into IRS Form 940 and is calculated for you if you are filling out the form and correctly following the Form 940 instructions.

But that nice FUTA credit (it’s a credit of .054 % by the way) gets reduced if you paid wages in one of the following states.

You can tell by the higher number for the State of Michigan (.009) that they must really owe a lot of money to the federal government for unemployment.

States Reduction Rate
Arkansas .003
California .003
Connecticut .003
Florida .003
Georgia .003
Illinois .003
Indiana .006
Kentucky .003
Michigan .009
Minnesota .003
Missouri .003
Nevada .003
New Jersey .003
New York .003
North Carolina .003
Ohio .003
Pennsylvania .003
Rhode Island .003
Virginia .003
Virgin Islands .003
Wisconsin .003