What is a credit reduction state?
693 views |Last modified 11/8/2023 6:31:29 AM EST | Added by TaxBandits Team

A state that hasn't repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state.” If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940.

Was this helpful? Yes No