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Changes to Federal Unemployment Taxes


Employers are required to pay an annual federal unemployment tax (FUTA) to the Internal Revenue Service. The FUTA tax covers the administrative costs of the Unemployment Insurance program, pays for the federal share of Extended Benefits and provides loans to states with insolvent trust funds.

The FUTA tax on employers is currently 6.0 percent. However, the federal government provides employers with FUTA tax credits that can reduce this percentage significantly.

As you may know, Rhode Island is one of 30 credit reduction states that borrowed from the federal government in recent years in order to continue to pay Unemployment Insurance (UI) benefits to eligible claimants. Prior to this borrowing, the FUTA tax credit available to Rhode Island employers was 5.4 percent, thereby reducing the total FUTA taxes due from the full 6.0 percent to 0.6 percent (6.0% tax -5.4% credit = 0.6%).

This is the third year in a row that RI employers will see a reduction in their FUTA tax credit. The credit reduction rises by an additional 0.3 percent each year. So the tax credit reduction will decrease by 0.9 percent for 2013 to 4.5 percent. This means that RI employers will pay a net FUTA tax of 1.5 percent for 2013
(6.0% tax - 4.5% credit=1.5%). The additional taxes collected by the credit reduction will be applied to RI's outstanding federal UI loan base.

The 1.5% FUTA tax is effective for RI employers’ 2013 federal taxable wages and will be due with your federal Form 940 by January 31, 2014.

Additional information is available under the ‘UI Info for Employers’ tab at www.dlt.ri.gov/ui. Click here for Questions and Answers on 2012 Tax Changes.

Questions on these tax changes should be directed to:

Phil D’Ambra, Chief of UI Employer Tax - (401) 574-8785


Need Assistance Filing your Taxes?

Free Tax Assistance for both Federal & State Income Tax Returns, if you income is under $50,000
dial “211” and ask for free tax assistance!

Also keep in mind if you have work income, full or part time job, odd jobs or side work, or are receiving a taxable disability pension you may qualify for the earned income tax credit which could give you up to $5,751 extra! Earned income and adjusted gross income (AGI) must each be less than:

  • $43,998 ($49,078 married filing jointly) with three or more qualifying children
  • $40,964 ($46,044 married filing jointly) with two qualifying children
  • $36,052 ($41,132 married filing jointly) with one qualifying child
  • $13,660 ($18,740 married filing jointly) with no qualifying children

The maximum amount of Earned Income Tax Credit a person can receive for 2011:

  • $5,751 with three or more qualifying children
  • $5,112 with two qualifying children
  • $3,094 with one qualifying child
  • $464 with no qualifying children

Investment income must be $3,150 or less for the year. Click here to access IRS Free Tax Preparation poster.

Click here for the Volunteer Income Tax Assistance List | Click here for the AARP Tax Assistance List (for Seniors)

RI Department of Labor and Training
Center General Complex
1511 Pontiac Avenue, Cranston, RI 02920

Phone: (401) 462-8000
Fax (401) 462-8666
TTY via RI Relay: 711
1/21/16 MDF
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