Every year states borrow money from the federal government to fund their unemployment reserves. The funds are expected to be paid back by 11/10 of every year, otherwise, the states would face an increase in their Federal Unemployment Tax (FUTA).
We saw this on display when Illinois could not repay their debt on time in 2022, and the federal unemployment tax went up by .3% (up from .6% to .9%). This resulted in employers having to pay up to $21 in additional taxes per employee in 2022.
Thankfully, Illinois was able to pay back their obligation by the 11/10 deadline for 2023 resulting in a no change to the .6% federal unemployment tax rate that we have been used to for a long time.
As a reminder, FUTA tax is reported on the annual Federal 940 form which is due on 1/31/2024.
If you have any questions, please feel free to contact Porte Brown partner, Mark Dekhtyar, at 847-956-1040.
Get in touch today and find out how we can help you meet your objectives.
