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February 10, 2012

The CalChamber reports that since January 1, California employers have been paying higher taxes because the state has not repaid money it borrowed from the federal government to pay unemployment insurance (UI) benefits.

Unless Congress takes action, which it is not expected to do, the higher tax will remain in effect through 2012 and then increase each year the state has an outstanding loan balance. California’s UI Trust Fund has been insolvent since 2009. By the end of 2012, the UI Fund deficit is projected to reach $10.7 billion, according to the California Employment Development Department (EDD). Employers will lose 0.3% of their federal tax credit, partially offset by the end of a 0.2% surcharge in July 2011.

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Posted In Taxes

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