[Federal Register Volume 91, Number 7 (Monday, January 12, 2026)]
[Notices]
[Page 1198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-00342]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employment and Training Administration


Notice of the Federal Unemployment Tax Act (FUTA) Credit 
Reductions Applicable for 2025

AGENCY: Employment and Training Administration, Department of Labor.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: Sections 3302(c)(2)(A) and 3302(d)(3) of FUTA provide that 
employers in a state that has outstanding advances under Title XII of 
the Social Security Act on January first of two or more consecutive 
years are subject to a reduction in credits otherwise available against 
the FUTA tax for the calendar year in which the most recent such 
January first occurs, if advances remain on November 10 of that year. 
Further, Section 3302(c)(2)(C) of FUTA provides for an additional 
credit reduction for a year if a state has outstanding advances on five 
or more consecutive January firsts and has a balance on November 10 for 
such years. Section 3302(c)(2)(C) provides for waiver of this 
additional credit reduction and substitution of the credit reduction 
provided in Section 3302(c)(2)(B) if a state meets certain conditions.
    As of January 1, 2025, California, Connecticut, New York, and the 
U.S. Virgin Islands had outstanding advances for two or more 
consecutive years and employers in these states were potentially 
subject to a FUTA credit reduction for 2025. Connecticut and New York 
each repaid their outstanding advances before November 10, 2025. As a 
result, employers in Connecticut and New York are not subject to a FUTA 
credit reduction for 2025. Neither California nor the U.S. Virgin 
Islands repaid all outstanding advances before November 10, 2025.
    California has had outstanding advances on January first for five 
consecutive years, and the U.S. Virgin Islands has had outstanding 
advances on January first for sixteen consecutive years. As such, 
employers in California and the U.S. Virgin Islands are subject to the 
basic credit reduction under Section 3302(c)(2)(A), FUTA, and were 
potentially liable for an additional reduction under Section 
3302(c)(2)(C), FUTA. Both California and the U.S. Virgin Islands 
applied for a waiver of this additional credit reduction and ETA 
determined that each state legally satisfied the conditions for this 
waiver per Section 3302(f)(2)(B), FUTA. Therefore, there will be no 
additional add-on credit reduction in California or the U.S. Virgin 
Islands.
    Employers in California are subject to a FUTA credit reduction of 
1.2 percent for 2025. Employers in the U.S. Virgin Islands are subject 
to a FUTA credit reduction of 4.5 percent for 2025.

Susan Frazier,
Acting Assistant Secretary for Employment and Training, Labor.
[FR Doc. 2026-00342 Filed 1-9-26; 8:45 am]
BILLING CODE 4510-FW-P