12

Presidential Proposed Budget 2015 – Short-Term Tax Relief to Employers

by | Apr 30, 2014 | Tax and Accounting Desk

The Federal Unemployment Tax Act (FUTA) currently imposes a federal payroll tax on employers of 6.0% of the first $7,000 paid annually to each employee.

If the employer has paid timely to up to date, and the state doesn’t owe unemployment to the federal fund, then employers are allowed a credit up to 5.4%, making the minimum net federal rate 0.6%.

As of April 1, 2014 sixteen states have loan balances totaling over $21 billion. Employers in those states pay the higher amounts for both taxes.

These tax increases may discourage job creation at a time when growth is needed in the U.S. But perhaps short-term debt relief will encourage economic growth and lead states to repay the debts, restoring monies to the UI system.

The 2015 Presidential budget proposes short-term relief to employers by suspending interest payments on debt and suspending the FUTA credit reduction for employers in borrowing states.

The proposal would also raise the FUTA wage base in 2017 to $15,000 per worker and reduce the net Federal UI tax from 0.8 percent (after the proposed permanent reenactment and extension of the FUTA surtax) to 0.37 percent.

States with wage bases below $15,000 would need to conform to the new FUTA base. States would maintain the ability to set their own tax rates, as long as they don’t conflict with federal law.

For complete information:

Stay Connected