The IRS has released Schedule A to Form 940. It provides a listing of all the credit reduction states for 2011. The following states will receive a 0.3% reduction: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia, Wisconsin and the Virgin Islands. This means that instead of receiving the full 5.4% credit for 2011 (payable in 2012), these states will only receive 5.1%, reflecting the 0.3% reduction.
The states of Indiana, Michigan and South Carolina were all credit reduction states in 2010, which meant that they did not receive the full credit for their 2010 taxes paid in 2011. Both Indiana and Michigan remain credit reduction states for 2011. Since this is Indiana’s second year as a credit reduction state, its employers will have a 0.6% reduction in the full credit, which means they will only receive a 4.8% credit instead of the full 5.4% credit. Michigan has been a credit reduction state for two years already so its employers will have a 0.9% reduction in the full credit, which means they will only receive a 4.5% credit instead of the full 5.4% credit. Luckily for South Carolina employers, the state has repaid its outstanding loans so they will once again receive the full 5.4% credit for 2011 (payable in 2012) (Schedule A (Form 940), 2011).