diff --git a/changelog.d/fix-futa-credit-reduction-zero-out.fixed.md b/changelog.d/fix-futa-credit-reduction-zero-out.fixed.md new file mode 100644 index 00000000000..cef9fbe5c8f --- /dev/null +++ b/changelog.d/fix-futa-credit-reduction-zero-out.fixed.md @@ -0,0 +1 @@ +Return the FUTA credit reduction rate to zero for AR, AZ, CT, DE, FL, GA, and IL in the year each state exited credit-reduction status, per IRS Schedule A (Form 940). diff --git a/policyengine_us/parameters/gov/irs/payroll/federal_unemployment/credit_reduction_rate.yaml b/policyengine_us/parameters/gov/irs/payroll/federal_unemployment/credit_reduction_rate.yaml index 361831133c0..c6fe811e0dd 100644 --- a/policyengine_us/parameters/gov/irs/payroll/federal_unemployment/credit_reduction_rate.yaml +++ b/policyengine_us/parameters/gov/irs/payroll/federal_unemployment/credit_reduction_rate.yaml @@ -8,6 +8,12 @@ metadata: reference: - title: Historical FUTA Credit Reductions href: https://oui.doleta.gov/unemploy/docs/reduced_credit_states_2010-2025.xlsx + - title: Schedule A (Form 940) for 2013 + href: https://www.irs.gov/pub/irs-prior/f940sa--2013.pdf + - title: Schedule A (Form 940) for 2014 + href: https://www.irs.gov/pub/irs-prior/f940sa--2014.pdf + - title: Schedule A (Form 940) for 2023 (credit-reduction jurisdictions listed in the instructions) + href: https://www.irs.gov/pub/irs-prior/f940sa--2023.pdf#page=2 AA: 0000-01-01: 0 AE: @@ -23,9 +29,11 @@ AR: 2011-01-01: 0.003 2012-01-01: 0.006 2013-01-01: 0.009 + 2014-01-01: 0 AZ: 0000-01-01: 0 2012-01-01: 0.003 + 2013-01-01: 0 CA: 0000-01-01: 0 2011-01-01: 0.003 @@ -51,21 +59,25 @@ CT: 2015-01-01: 0.021 2016-01-01: 0 2022-01-01: 0.003 + 2023-01-01: 0 DC: 0000-01-01: 0 DE: 0000-01-01: 0 2012-01-01: 0.003 2013-01-01: 0.006 + 2014-01-01: 0 FL: 0000-01-01: 0 2011-01-01: 0.003 2012-01-01: 0.006 + 2013-01-01: 0 GA: 0000-01-01: 0 2011-01-01: 0.003 2012-01-01: 0.006 2013-01-01: 0.009 + 2014-01-01: 0 GU: 0000-01-01: 0 HI: @@ -79,6 +91,7 @@ IL: 2011-01-01: 0.003 2012-01-01: 0 2022-01-01: 0.003 + 2023-01-01: 0 IN: 0000-01-01: 0 2010-01-01: 0.003 diff --git a/policyengine_us/tests/policy/baseline/gov/irs/payroll/unemployment/employer_federal_unemployment_tax.yaml b/policyengine_us/tests/policy/baseline/gov/irs/payroll/unemployment/employer_federal_unemployment_tax.yaml index 1e04bcac865..6388f7a78b1 100644 --- a/policyengine_us/tests/policy/baseline/gov/irs/payroll/unemployment/employer_federal_unemployment_tax.yaml +++ b/policyengine_us/tests/policy/baseline/gov/irs/payroll/unemployment/employer_federal_unemployment_tax.yaml @@ -21,3 +21,113 @@ output: employer_federal_unemployment_tax_rate: 0.018 employer_federal_unemployment_tax: 126 + +- name: Florida's credit reduction applies in 2012. + period: 2012 + input: + state_code: FL + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.012 + employer_federal_unemployment_tax: 84 + +- name: Florida returns to the standard rate in 2013 after repaying its loans. + period: 2013 + input: + state_code: FL + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Georgia returns to the standard rate in 2014 after repaying its loans. + period: 2014 + input: + state_code: GA + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Connecticut returns to the standard rate in 2023 after repaying its loans. + period: 2023 + input: + state_code: CT + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Illinois returns to the standard rate in 2023 after repaying its loans. + period: 2023 + input: + state_code: IL + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Arizona returns to the standard rate in 2013 after repaying its loans. + period: 2013 + input: + state_code: AZ + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Arkansas returns to the standard rate in 2014 after repaying its loans. + period: 2014 + input: + state_code: AR + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Delaware returns to the standard rate in 2014 after repaying its loans. + period: 2014 + input: + state_code: DE + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Florida stays at the standard rate in 2015, two years after exiting (the zero persists). + period: 2015 + input: + state_code: FL + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: Florida stays at the standard rate in 2026, well after exiting (the zero does not carry a stale rate forward). + period: 2026 + input: + state_code: FL + payroll_tax_gross_wages: 10_000 + output: + employer_federal_unemployment_tax_rate: 0.006 + employer_federal_unemployment_tax: 42 + +- name: California is still a credit-reduction state in 2023, so the reduction still applies. + period: 2023 + input: + state_code: CA + payroll_tax_gross_wages: 10_000 + output: + # 2023 credit reduction 0.006 on top of the 0.006 net FUTA rate. + employer_federal_unemployment_tax_rate: 0.012 + employer_federal_unemployment_tax: 84 + +- name: Connecticut is still reduced in 2022, the year before it exits. + period: 2022 + input: + state_code: CT + payroll_tax_gross_wages: 10_000 + output: + # 2022 credit reduction 0.003 on top of the 0.006 net FUTA rate. + employer_federal_unemployment_tax_rate: 0.009 + employer_federal_unemployment_tax: 63