© 2024 American Payroll Institute, Inc.
Three States, Virgin Islands Still Face Credit Reduction for 2024
The U.S. Department of Labor (DOL) updated its list of
potential FUTA credit reduction states and territories for
2024, and they remain California, Connecticut, New York, and
the U.S. Virgin Islands (see PAYSTATE UPDATE, Issue 2, Vol. 26).
The determination will be made after November 10, 2024
[DOL, Potential 2024 Federal Unemployment Tax Act (FUTA)
Credit Reductions, 4‑8‑24].
States with outstanding loans
If states have an outstanding Federal Unemployment
Account (FUA) loan on January 1 of at least two consecutive
years and on November 10 of the second year, they are
subject to a credit reduction on their Federal Unemployment
Tax rate until the loan has been paid off. Each year a state
has an outstanding loan balance on January 1, the credit
reduction increases by 0.3%. However, states that have
made an effort to keep their balances in check have some
opportunities to avoid the reduction (see The Payroll
Source®, §7.1‑6).
As of April 9, 2024, three states (California, Connecticut,
and New York) have an outstanding FUA loan balance, along
with the Virgin Islands. The DOL maintains a list of states and
their current FUA loan amounts that is updated frequently.
Employers in these states/territory may be subject to
an additional FUTA credit reduction for 2024 because the
states began borrowing in 2021 and had outstanding FUA
loan balances on January 1, 2022, January 1, 2023, and
January 1, 2024. If these states do not repay the outstanding
loans by November 10 of this year, they will be subject to an
increased credit reduction of 0.9%. The additional FUTA tax
would be due on January 31, 2025.
California, New York face increased credit reduction
California and New York have a credit reduction of 0.6%
for 2023 and may face a credit reduction of 0.9% for 2024.
Connecticut could face credit reduction
Connecticut paid off its outstanding loan balance by
the November 10, 2023, deadline and was not subject to a
credit reduction for 2023. However, Connecticut resumed
borrowing and had an outstanding loan balance on
January 1, 2024. Because it had an outstanding balance on
three consecutive January 1 (in 2022, 2023, and 2024), it is
subject to a potential credit reduction of 0.9%, even though it
was not subject to a credit reduction for 2023. If Connecticut
pays off its outstanding loan by November 10, 2024, it will
not be subject to a credit reduction for 2024.
Virgin Islands likely to face reduction again
The Virgin Islands began borrowing in August 2009, has
a current outstanding balance of $81,030,249.30, and might
be subject to a FUTA credit reduction of 5.1% for 2024. This
has been updated from 5% when the initial projection
was released in January (see PAYSTATE UPDATE, Issue 2,
Vol. 26). The potential credit reduction of 5.1% includes a
basic reduction of 4.2% and Benefit Cost Rate (BCR) add‑on
of 0.9% (which could be waived and has been in years past).
The territory was subject to a credit reduction of 3.9%
for 2023 (see PAYSTATE UPDATE, Issue 23, Vol. 25). The
additional FUTA tax was due, along with the 2023 Form 940,
Employer’s Annual Federal Unemployment (FUTA) Tax Return, by
January 31, 2024 (see PAYSTATE UPDATE, Issue 1, Vol. 26).
Several States Use SIDES for Help With UI Compliance
Federal budget proposals would make use of the State
Information Data Exchange System (SIDES) mandatory.
However, most states have already begun using the system.
According to participant maps on the National Association of
State Workforce Agencies (NASWA) website, most states are
now using the program in some capacity to streamline and
simplify unemployment insurance (UI) compliance procedures.
What is SIDES?
SIDES is offered by NASWA in partnership with the U.S.
Department of Labor. SIDES specifically supports the UI
processing services through its six exchanges. SIDES is built
specifically for states, employers, third‑party administrators,
and professional employer organizations (PEOs).
In addition, SIDES E‑Response is a free website for
employers of participating states that allows submission
of UI requests directly to state employment agencies.
When an employer receives a request, it can use the
provided PIN to access and complete the responses. Once
completed, a confirmation number and downloadable
PDF will immediately be available for the employer’s
records. Employers do not need IT development or system
integration to access SIDES E‑Response. The SIDES System
Integration Solution, which is also free, requires more
resources to implement.
State and territory participation
As of March 12, 2024, here are the states and territories
participating in the six SIDES exchanges:
Separation information: All states except three
(Arkansas, Massachusetts, and Minnesota), District of
Columbia, Puerto Rico, and U.S. Virgin Islands.
Earnings verification: Alabama, Alaska, Colorado,
Delaware, District of Columbia, Florida, Illinois, Maryland,
Montana, Nebraska, Nevada, New York, North Carolina,
Oregon, Tennessee, Virginia, West Virginia, and Wisconsin.
April 29, 2024 Volume 26 Issue 9
Three States, Virgin Islands Still Face Credit Reduction for 2024
The U.S. Department of Labor (DOL) updated its list of
potential FUTA credit reduction states and territories for
2024, and they remain California, Connecticut, New York, and
the U.S. Virgin Islands (see PAYSTATE UPDATE, Issue 2, Vol. 26).
The determination will be made after November 10, 2024
[DOL, Potential 2024 Federal Unemployment Tax Act (FUTA)
Credit Reductions, 4‑8‑24].
States with outstanding loans
If states have an outstanding Federal Unemployment
Account (FUA) loan on January 1 of at least two consecutive
years and on November 10 of the second year, they are
subject to a credit reduction on their Federal Unemployment
Tax rate until the loan has been paid off. Each year a state
has an outstanding loan balance on January 1, the credit
reduction increases by 0.3%. However, states that have
made an effort to keep their balances in check have some
opportunities to avoid the reduction (see The Payroll
Source®, §7.1‑6).
As of April 9, 2024, three states (California, Connecticut,
and New York) have an outstanding FUA loan balance, along
with the Virgin Islands. The DOL maintains a list of states and
their current FUA loan amounts that is updated frequently.
Employers in these states/territory may be subject to
an additional FUTA credit reduction for 2024 because the
states began borrowing in 2021 and had outstanding FUA
loan balances on January 1, 2022, January 1, 2023, and
January 1, 2024. If these states do not repay the outstanding
loans by November 10 of this year, they will be subject to an
increased credit reduction of 0.9%. The additional FUTA tax
would be due on January 31, 2025.
California, New York face increased credit reduction
California and New York have a credit reduction of 0.6%
for 2023 and may face a credit reduction of 0.9% for 2024.
Connecticut could face credit reduction
Connecticut paid off its outstanding loan balance by
the November 10, 2023, deadline and was not subject to a
credit reduction for 2023. However, Connecticut resumed
borrowing and had an outstanding loan balance on
January 1, 2024. Because it had an outstanding balance on
three consecutive January 1 (in 2022, 2023, and 2024), it is
subject to a potential credit reduction of 0.9%, even though it
was not subject to a credit reduction for 2023. If Connecticut
pays off its outstanding loan by November 10, 2024, it will
not be subject to a credit reduction for 2024.
Virgin Islands likely to face reduction again
The Virgin Islands began borrowing in August 2009, has
a current outstanding balance of $81,030,249.30, and might
be subject to a FUTA credit reduction of 5.1% for 2024. This
has been updated from 5% when the initial projection
was released in January (see PAYSTATE UPDATE, Issue 2,
Vol. 26). The potential credit reduction of 5.1% includes a
basic reduction of 4.2% and Benefit Cost Rate (BCR) add‑on
of 0.9% (which could be waived and has been in years past).
The territory was subject to a credit reduction of 3.9%
for 2023 (see PAYSTATE UPDATE, Issue 23, Vol. 25). The
additional FUTA tax was due, along with the 2023 Form 940,
Employer’s Annual Federal Unemployment (FUTA) Tax Return, by
January 31, 2024 (see PAYSTATE UPDATE, Issue 1, Vol. 26).
Several States Use SIDES for Help With UI Compliance
Federal budget proposals would make use of the State
Information Data Exchange System (SIDES) mandatory.
However, most states have already begun using the system.
According to participant maps on the National Association of
State Workforce Agencies (NASWA) website, most states are
now using the program in some capacity to streamline and
simplify unemployment insurance (UI) compliance procedures.
What is SIDES?
SIDES is offered by NASWA in partnership with the U.S.
Department of Labor. SIDES specifically supports the UI
processing services through its six exchanges. SIDES is built
specifically for states, employers, third‑party administrators,
and professional employer organizations (PEOs).
In addition, SIDES E‑Response is a free website for
employers of participating states that allows submission
of UI requests directly to state employment agencies.
When an employer receives a request, it can use the
provided PIN to access and complete the responses. Once
completed, a confirmation number and downloadable
PDF will immediately be available for the employer’s
records. Employers do not need IT development or system
integration to access SIDES E‑Response. The SIDES System
Integration Solution, which is also free, requires more
resources to implement.
State and territory participation
As of March 12, 2024, here are the states and territories
participating in the six SIDES exchanges:
Separation information: All states except three
(Arkansas, Massachusetts, and Minnesota), District of
Columbia, Puerto Rico, and U.S. Virgin Islands.
Earnings verification: Alabama, Alaska, Colorado,
Delaware, District of Columbia, Florida, Illinois, Maryland,
Montana, Nebraska, Nevada, New York, North Carolina,
Oregon, Tennessee, Virginia, West Virginia, and Wisconsin.
April 29, 2024 Volume 26 Issue 9
