From 68fe96b584926ab5af916eafe41aa493a4be2cdf Mon Sep 17 00:00:00 2001 From: David Trimmer Date: Mon, 24 Aug 2026 09:57:25 -0400 Subject: [PATCH 1/2] Zero out FUTA credit reduction for states that exited credit-reduction status AR, AZ, CT, DE, FL, GA, and IL kept their last nonzero credit-reduction rate indefinitely because the parameter never returned them to zero after they repaid their Title XII loans. Add the zero-out entries verified against the IRS Schedule A (Form 940) forms for 2013, 2014, and 2023, with regression tests for the exit years. Fixes #9325 Co-Authored-By: Claude Fable 5 Claude-Session: https://claude.ai/code/session_01MPoZoUr5EF2ZsBbubBPuHu --- ...ix-futa-credit-reduction-zero-out.fixed.md | 1 + .../credit_reduction_rate.yaml | 13 ++++++ .../employer_federal_unemployment_tax.yaml | 45 +++++++++++++++++++ 3 files changed, 59 insertions(+) create mode 100644 changelog.d/fix-futa-credit-reduction-zero-out.fixed.md 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..35df9ffdf9d 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 + href: https://www.irs.gov/pub/irs-prior/f940sa--2023.pdf 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..eac506a2ad0 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 +21,48 @@ 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 From 443f88410299b41dc42109c15280ef345ee09588 Mon Sep 17 00:00:00 2001 From: David Trimmer Date: Mon, 24 Aug 2026 10:30:04 -0400 Subject: [PATCH 2/2] Add FUTA credit-reduction regression tests from review Address the review's test-coverage gaps on #9326: - Persistence: FL 2015 and 2026 stay at the standard 0.6% rate, proving the zero-out persists under carry-forward rather than being a single-year override. - Untested exits: add AZ (2013), AR (2014), DE (2014) exit-year cases. - Still-reduced guard: CA 2023 (0.012 = 0.006 net + 0.006 reduction -> $84) and CT 2022 prior-year (0.009 -> $63), confirming the fix did not over-zero. Also anchor the 2023 Schedule A reference at the instructions page (#page=2) where the credit-reduction jurisdiction list appears. FUTA suite 15/15. Co-Authored-By: Claude Opus 4.8 --- .../credit_reduction_rate.yaml | 4 +- .../employer_federal_unemployment_tax.yaml | 65 +++++++++++++++++++ 2 files changed, 67 insertions(+), 2 deletions(-) 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 35df9ffdf9d..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 @@ -12,8 +12,8 @@ metadata: 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 - href: https://www.irs.gov/pub/irs-prior/f940sa--2023.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: 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 eac506a2ad0..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 @@ -66,3 +66,68 @@ 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