--- title: California Faces a FUTA Credit Reduction for 2022 description: California will be a FUTA credit reduction state for 2022, with a basic reduction of 0.3%. image: https://www.americanpayroll.org/images/default-source/default-album/eddcalif.jpg?sfvrsn=9fa972e3_0 --- [![soc-fb](https://blogs.payroll.org/hubfs/ct-23-assets/footer-icon_fb.svg "soc-fb")](https://www.facebook.com/American-Payroll-Associations-Chapter-Relations-877434285724525/) [![soc-in](https://blogs.payroll.org/hubfs/ct-23-assets/footer-icon_li.svg "soc-in")](http://www.linkedin.com/groups?about=&gid=1051077&trk=anet_ug_grppro) [![soc-tw](https://blogs.payroll.org/hubfs/ct-23-assets/footer-icon_tw.svg "soc-tw")](https://twitter.com/APAChapters?lang=en) - [Home](https://blogs.payroll.org/chapter-leaders) - [About](https://blogs.payroll.org/about) - [Connect](https://blogs.payroll.org/connect) - [Resources](https://blogs.payroll.org/resources) ![23-PayNewsNow-Horiz-Logo](https://blogs.payroll.org/hs-fs/hubfs/23-PayNewsNow-Horiz-Logo.png?width=1300&name=23-PayNewsNow-Horiz-Logo.png "23-PayNewsNow-Horiz-Logo") [![26 PayrollOrg®RGB-NoTag long](https://blogs.payroll.org/hs-fs/hubfs/26%20PayrollOrg%C2%AERGB-NoTag%20long.jpg?width=1300&name=26%20PayrollOrg%C2%AERGB-NoTag%20long.jpg "26 PayrollOrg®RGB-NoTag long")](https://payroll.org/) Custom URL No Widget: By [Lia Coniglio, Esq.](https://blogs.payroll.org/pay-news-now/author/lia-coniglio-esq) on Nov 3, 2022 9:51:58 AM # California Faces a FUTA Credit Reduction for 2022 California’s Employment Development Department (EDD) [**announced**](https://edd.ca.gov/en/Payroll_Taxes/federal-unemployment-tax-act) that the state will not pay back its Federal Unemployment Account (FUA) loans by the November 10, 2022, deadline and will be a Federal Unemployment Tax Act (FUTA) credit reduction state for 2022, with a basic reduction of 0.3% \[EDD, Tax Branch News No. 503, 11-1-22\]. Later this month, the U.S. Department of Labor will announce the states and territories that have **[**balances**](https://oui.doleta.gov/unemploy/budget.asp)** on outstanding FUA loans. As of November 1, five states and the U.S. Virgin Islands have an [**outstanding FUA loan balance**](https://fiscaldata.treasury.gov/datasets/ssa-title-xii-advance-activities/advances-to-state-unemployment-funds-social-security-act-title-xii). The additional FUTA tax would be due on January 31, 2023. If states have outstanding FUA loans on January 1 of at least two consecutive years *and* on November 10 of the second year, they are subject to a credit reduction on their FUTA rate until the loan has been paid off. Each year a loan continues to be unpaid, the credit reduction increases by 0.3%, though states that have made an effort to keep their balances in check have some opportunities to avoid the reduction. Interested in more state and local payroll coverage? APA’s [***PayState Update***](https://ebiz.americanpayroll.org/ebusiness/ProductCatalog/Product.aspx?ID=19) eNewsletter is perfect for you. --- *Lia Coniglio, Esq., is Managing Editor of* PayState Update *and Senior Manager of State Payroll Information Resources for the APA.* ### Search ![payroll-logo-white](https://blogs.payroll.org/hs-fs/hubfs/payroll-logo-white.png?width=200&name=payroll-logo-white.png "payroll-logo-white") [Privacy Policy](http://www.americanpayroll.org/privacy/)     |     Acceptable Use ©[PayrollOrg](http://payroll.org) [![soc-fb](https://blogs.payroll.org/hubfs/ct-23-assets/footer-icon_fb.svg "soc-fb")](https://www.facebook.com/PayrollOrg) [![soc-in](https://blogs.payroll.org/hubfs/ct-23-assets/footer-icon_li.svg "soc-in")](https://www.linkedin.com/company/payroll-org/mycompany/) [![Twitter-X-White-Logo-PNG](https://blogs.payroll.org/hs-fs/hubfs/Twitter-X-White-Logo-PNG.png?width=20&height=19&name=Twitter-X-White-Logo-PNG.png)](https://twitter.com/PayNews)