The state Department of Labor today announced that Connecticut employers will pay a lower unemployment insurance federal tax, with no special assessment, this calendar year. The lower rates are the result of the state’s repaying of a federal loan that was needed to continue paying unemployment insurance benefits during the recession.
The state said with the loan now fully repaid, Connecticut employers will see their Federal Unemployment Tax Act (FUTA) taxes reduced to the customary rate of 0.6 percent for calendar year 2016 – a significant drop from the total FUTA tax rate of 2.7 percent for calendar year 2015.
The labor department said an employer’s tax will return to an average of $42 per employee compared to the $189 paid while the loan was being repaid. In addition, the state will pay the final interest due to the federal government this year, which means employers will not pay the additional special assessment.
In 2009, the state’s employer-supported UI trust fund became insolvent when the national economic recession resulted in unemployment rates as high as 9 percent, creating a sharp increase in the number of residents relying on unemployment benefits, said State Labor Commissioner Scott D. Jackson.
Connecticut’s federal loan was paid off March 24, 2016. Currently, four states – California, Kentucky, Ohio and the Virgin Islands – continue to have outstanding loans with the USDOL’s federal unemployment account, while an additional half-dozen states are repaying federal loans through bonding programs.
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