Tax Updates

Important FUTA Credit Reduction Update for Ohio Employers

The following notice from the Ohio Department of Budget and Management indicates that Ohio will again be a FUTA Credit Reduction State for 2015 and 2016.

Ohio is to be a Federal Unemployment Tax Act credit-reduction jurisdiction for 2015 and 2016, as the state is to pay interest on its federal unemployment loan balance in 2015, 2016 and 2017, said Tim Keen, director of the state Office of Budget and Management, in testimony Feb. 3 for the state House Finance and Appropriations Committee.

For 2015, Ohio employers are to have a general credit reduction of 1.5 percent and a benefit cost-rate add-on credit reduction of 1.2 percent, which together would increase costs for Ohio employers by up to $189 for each employee.

Beginning with your first payroll in May, Ahola will begin deducting the additional FUTA Credit Reduction tax for Ohio employers. Normally, this process was done at the end of the year causing many companies a hardship to come up with the additional FUTA taxes. Now these taxes will be spread throughout the rest of the year and eliminate the year-end process.

This only affects employees working in the State of Ohio. There will be other States that will be identified by the Department of Labor on November 10, 2015. There is no change to the year-end process for these non-Ohio States that still need to repay their unemployment loans.

We will retro-actively calculate the additional FUTA tax back to January. You should expect to see a slightly larger tax amount with your first May Payroll.

Please contact our Customer Service Department at 440-717-7620 and use Option 7.