Illinois Employers Owe Federal Unemployment Tax

Published On: December 6th, 2022Categories: Accounting, Payroll, Payroll Tax, Small Business

The U.S. Department of Labor recently announced that Illinois was one of four states that is a credit reduction state and will lose the full Federal Unemployment Tax Act (FUTA) credit for 2022, causing an increase in the percentage owed by employers.

What does this mean?
The State of Illinois has taken loans from the federal government to meet its state unemployment benefits liabilities and has not repaid the borrowed funds within the timeframe required.

The amount owed for Federal Unemployment Tax for Illinois employers has been .6% of the first $7,000 of FUTA taxable wages or a maximum of $42 per employee per year. However, due to the credit reduction, the amount will increase to .9% of the first $7,000 of FUTA taxable wages or a maximum of $63 per employee for 2022.

What do I need to do?
Your payroll software has likely accumulated a liability of $42 per employee for the year. But you will need to plan for the additional $21 per employee due on 1/31/23.

We are here to guide you through these changes in the Federal Unemployment Tax. Please reach out to our payroll specialists should you have any questions.

About the Author: Andrea Doerdelmann

Andrea Doerdelmann is every payroll client’s preferred Eccezion team member, or she’s at least their employees’ favorite– whether they know it or not. Why? She makes sure everyone gets paid. “Andrea is the lead team member of our payroll department,” firm partner Shelly Casella-Dercole says. “She is great at following through with clients and resolving payroll issues. She is also excellent at adapting to various client accounting systems to get payroll done on the client’s system rather than ours.”