2024 Payroll Tax Updates for CT Employers

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The Human Resource Consulting Group

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on Jul 3, 2024 1:14:00 PM

Are you keeping up with the federal and state labor law changes in 2024? There are several important labor law changes that will impact most employers in the state of Connecticut in 2024. Employers should be aware of all the changes and make sure to take action to meet compliance requirements promptly.

*Updated on 7/3/24*

In this article, we'll discuss important payroll tax changes for Connecticut employers in 2024. To learn more about all the federal and state labor law updates for Connecticut employers, read about it here

2024 FUTA Tax Rate Increase for Connecticut

According to the U.S. Department of Labor, on November 10, 2022, Connecticut became a Federal Unemployment Tax Act (FUTA) credit reduction state.

FUTA Rates

Generally, the standard FUTA tax rate is 6.0% on the first $7,000 of wages subject to FUTA. Employers would receive a universal credit of 5.4% when they file their Form-940. This will result in a net FUTA tax rate of 0.6%.

FUTA Credit Reduction

However, like many other states, Connecticut had an outstanding balance of the Federal Unemployment Trust Fund loans, which were borrowed from the federal government to pay the Unemployment Insurance benefits for residents of CT during the pandemic. 

If a state has outstanding loan balances on January 1 for two consecutive years and does not repay the full amount of its loans by November 10 of the second year, the FUTA credit rate (5.4%) for employers in that state will be reduced until the loan is repaid.

FUTA Rate for Connecticut in 2024

Connecticut became a Federal Unemployment Tax Act (FUTA) credit reduction state on November 10, 2022, due to the outstanding loan balance, and was applied with a 0.3% FUTA credit rate reduction for 2023. This resulted in a 0.3% increase in their FUTA rate:

  • 2023 FUTA rate for a non credit reduction state: 6.0% - 5.4% = 0.6%
  • 2023 FUTA rate for Connecticut = 6.0% - (5.4% - 0.3%) = 0.9%

As of January 1, 2024, Connecticut's outstanding loan balance was still not paid off. If the loan balance is not paid out by November 10, 2024, employers in Connecticut are subject to an additional 0.3% reduction of their FUTA credit:

  • 2024 FUTA rate for a non credit reduction state: 6.0% - 5.4% = 0.6%
  • 2024 FUTA rate for Connecticut = 6.0% - (5.4% - 0.3% - 0.3%) = 1.2%

Employers in Connecticut will have to pay an additional 0.3% in federal unemployment tax for wages paid to employees, based on the FUTA taxable wage base of $7,000 for 2024.

2024 CT SUTA Tax Rate Updates

In 2023, the Connecticut state unemployment tax rate was reduced by 0.2% to mitigate the impact of the federal increase for CT employers, according to the Public Act 22-118.

  • The state’s new employer rate, originally 3.0% for 2023, was reduced to 2.8%.
  • The fund solvency tax rate, originally 1.4% for 2023, is reduced to 1.2%.

In 2024, the state of Connecticut continued its effort to support CT employers as well as promote long-term UI Trust Fund solvency. The following Connecticut SUTA tax changes were effective as of January 1, 2024:

  • The taxable wage subject to SUTA tax increases from $15,000 to $25,000 and will keep increasing each year moving forward due to inflation
  • The state’s minimum charged rate is reduced from 0.5% to 0.1%
  • The state’s maximum charged rate increases from 5.4% to 10.0%
  • The state’s maximum fund solvency tax rate is reduced from 1.4% to 1.0%
    • If there's an economic recession, the maximum fund solvency tax rate will be further reduced to 0.5%

Navigate Through CT Payroll Tax Updates

Navigating the federal and state payroll taxes is not an easy task. Connecticut employers can consult with a CT payroll provider for personalized guidance and support to ensure compliance with payroll taxes.

Aside from payroll tax updates, there are several federal labor law changes in 2024. Employers need to understand how these changes may affect their business and employees while making necessary adjustments to meet the new compliance requirements.

Connecticut Labor Law Updates in 2023

*Updated in June 2023*

CT Public Act 21-5 & Experience Rating

Public Act 21-5 modified the method of calculating tax rates for tax years beginning on or after January 1, 2022. This mitigates the impact of previous high Unemployment Insurance claims due to the pandemic.

How Does Public Act 21-5 Impact Employers' Experience Rating?

According to Public Act 21-5, the new experience rate calculation will not include unemployment benefits paid to a company's former employees and taxable wages for experience years ended June 30, 2020, and June 30, 2021.

How Does Public Act 21-5 Impact New Employers' Rates?

For new employers who don't currently have an experience rate, the rate charged to them will be calculated without factoring in the benefits paid and the taxable wages reported during calendar years 2020 and 2021.

MyCTSavings Retirement Program

MyCTSavings is a new state-sponsored retirement savings program created to support Connecticut employees in saving and planning for a financially secure future. It applies to all Connecticut employers that have 5 or more employees and don't provide a qualified, employer-sponsored retirement savings plan.

As announced by the Connecticut Office of the State Comptroller on April 5, 2023, the registration deadline for the MyCTSavings program was extended to August 31, 2023.

CT Special Assessment Waive

An annual Special Assessment is a supplemental bill that covers accrued interest levied in August each year on active Connecticut contributory employers. Generally, the state would collect these from employers to pay off the federal loan interests. In response to the pandemic, all interests on Unemployment Insurance trust fund loans through September 6, 2021, were waived. However, for Connecticut, there was still approximately $1 million of interest from September 7, 2021, through September 30, 2021, which was due September 30, 2021.
 
The good thing is the Special Assessment for last year is waived for all Connecticut employers. Governor Lamont authorized the state to pay off the interest without needing employers to pay, in order to eliminate some financial burden on Connecticut businesses caused by the pandemic.
 
Furthermore, foreseeing the continuing accrual of outstanding pandemic-related loan interest through September 2026, Governor Lamont committed that the state will pay the interest due from September 2022 through September 2026. This will lift the burden of any special assessments for CT employers and will relieve up to $30 million of interest costs. 

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Topics:Connecticut HRFUTASUTAFUTA 2024CT SUTA

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