State’s Businesses to Save on Federal Unemployment Taxes for Fourth Consecutive Year

For the fourth consecutive year, S.C. businesses will only pay the minimum 0.6 percent per employee for federal unemployment taxes (FUTA) because the Palmetto State once again met the requirements to obtain the maximum 5.4 percent credit for 2014 FUTA.

South Carolina is the only borrowing state to receive a waiver for the full 5.4 percent. Receiving this credit means S.C. businesses will save up to $140 per worker.

“This is just another example of the positive track our state’s unemployment trust fund is on as we approach solvency in the coming year,” said Cheryl M. Stanton, executive director of the SC Department of Employment and Workforce (DEW). “Thanks to diligent fiscal stewardship by our governor and General Assembly, we are able to tell the state’s business community that it will realize the maximum benefits of FUTA cost savings for the fourth year in a row.”

Federal law requires a reduction in the FUTA tax credit (i.e. that the FUTA rate for a state’s employers will increase) when a state has outstanding federal unemployment loans for two consecutive Januarys and has not made sufficient voluntary payments towards the loan and other solvency improvement measures. Such reduction in the FUTA tax credit would be higher when a state has outstanding federal unemployment loans for five consecutive Januarys—which is the case in South Carolina. However, borrowing states like South Carolina can formally ask the U.S. Department of Labor for the credit reduction to be avoided if they meet certain criteria that exhibit fiscal responsibility.

One of the requirements was that South Carolina make a voluntary payment toward the outstanding loan balance before Nov. 10. This year, the state made a $60 million payment in April and a $126 million payment in September. Most importantly, S.C. businesses have seen an 18 to 25 percent reduction in their unemployment taxes since 2011.

South Carolina also has repaid approximately $700 million of the $977 million borrowed from the federal government.

The outstanding balance on the loan is $270 million, and the state is scheduled to repay the loan in full by the end of 2015.

State’s Businesses Can Save on Federal Unemployment Taxes for Third Year

For the third consecutive year South Carolina businesses will only pay the minimum 0.6 percent per employee for federal unemployment taxes (FUTA) because the Palmetto State once again successfully obtained the maximum 5.4 percent credit for 2013 FUTA.

“Thanks to the great work from our state’s governor, business community and legislators, South Carolina employers will reap the maximum benefits of FUTA cost savings for the third year in a row,” said Cheryl M. Stanton, executive director of the SC Department of Employment and Workforce (DEW). “The FUTA credit also reflects the positive overall trend for the state as our unemployment trust fund continues to reach solvency.”

Federal law requires a reduction in the FUTA tax credit (i.e. that the FUTA rate for a state’s employers will increase) when a state has outstanding federal unemployment loans for two consecutive Januarys and has not made sufficient voluntary payments towards the loan and other solvency improvement measures.

Additionally, the reduction in the FUTA tax credit is higher when a state has outstanding federal unemployment loans for five consecutive Januarys—which is the case in South Carolina. However, borrowing states like South Carolina can formally ask the U.S. Department of Labor for the credit reduction to be avoided if they meet certain criteria.

One of the requirements was that South Carolina make a voluntary payment toward the outstanding loan balance before Nov. 10. The state made a $144 million payment in May and a $75 million payment in September.

To date, South Carolina has repaid more than $520 million of the $977 million borrowed from the federal government. The outstanding balance is approximately $455 million, and the state is scheduled to repay the entire loan amount by the end of 2015.

The 2014 state unemployment tax rate table can be accessed on the DEW website here .