26 U.S.C. § 3301 — Rate of tax

Page 2761 TITLE 26—INTERNAL REVENUE CODE § 3301 endar year is the percentage determined in ac- cordance with the table in subsection (b). (b) Tax rate schedule Average account benefits ratio Applicable percentage for sections 3211(b) and 3221(b) Applicable percentage for section 3201(b) At least But less than 2.5 22.1 4.9 2.5 3.0 18.1 4.9 3.0 3.5 15.1 4.9 3.5 4.0 14.1 4.9 4.0 6.1 13.1 4.9 6.1 6.5 12.6 4.4 6.5 7.0 12.1 3.9 7.0 7.5 11.6 3.4 7.5 8.0 11.1 2.9 8.0 8.5 10.1 1.9 8.5 9.0 9.1 0.9 9.0 8.2 0 (c) Definitions related to determination of rates of tax (1) Average account benefits ratio For purposes of this section, the term ‘‘aver- age account benefits ratio’’ means, with re- spect to any calendar year, the average deter- mined by the Secretary of the account bene- fits ratios for the 10 most recent fiscal years ending before such calendar year. If the amount determined under the preceding sen- tence is not a multiple of 0.1, such amount shall be increased to the next highest multiple of 0.1. (2) Account benefits ratio For purposes of this section, the term ‘‘ac- count benefits ratio’’ means, with respect to any fiscal year, the amount determined by the Railroad Retirement Board by dividing the fair market value of the assets in the Railroad Retirement Account and of the National Rail- road Retirement Investment Trust (and for years before 2002, the Social Security Equiva- lent Benefits Account) as of the close of such fiscal year by the total benefits and adminis- trative expenses paid from the Railroad Re- tirement Account and the National Railroad Retirement Investment Trust during such fis- cal year. (d) Notice No later than December 1 of each calendar year, the Secretary shall publish a notice in the Federal Register of the rates of tax determined under this section which are applicable for the following calendar year. (Added Pub. L. 107–90, title II, § 204(d), Dec. 21, 2001, 115 Stat. 892.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Subchapter applicable to calendar years beginning after Dec. 31, 2001, see section 204(f) of Pub. L. 107–90, set out as an Effective and Termination Dates of 2001 Amendments note under section 24 of this title. CHAPTER 23—FEDERAL UNEMPLOYMENT TAX ACT Sec. 3301. Rate of tax. Sec. 3302. Credits against tax. 3303. Conditions of additional credit allowance. 3304. Approval of State laws. 3305. Applicability of State law. 3306. Definitions. 3307. Deductions as constructive payments. 3308. Instrumentalities of the United States. 3309. State law coverage of services performed for nonprofit organizations or governmental entities. 3310. Judicial review. 3311. Short title. Editorial Notes AMENDMENTS 1976—Pub. L. 94–566, title I, § 115(c)(4), Oct. 20, 1976, 90 Stat. 2671, substituted ‘‘services performed for non- profit organizations or governmental entities’’ for ‘‘certain services performed for nonprofit organizations and for State hospitals and institutions of higher edu- cation’’ in item 3309. 1970—Pub. L. 91–373, title I, §§ 104(b)(2), 131(b)(3), Aug. 10, 1970, 84 Stat. 699, 705, added items 3309 and 3310 and redesignated former item 3309 as 3311. 1960—Pub. L. 86–778, title V, § 531(d)(2), Sept. 13, 1960, 74 Stat. 984, added item 3308 and redesignated former item 3308 as 3309. § 3301. Rate of tax There is hereby imposed on every employer (as defined in section 3306(a)) for each calendar year an excise tax, with respect to having individuals in his employ, equal to 6 percent of the total wages (as defined in section 3306(b)) paid by such employer during the calendar year with respect to employment (as defined in section 3306(c)). (Aug. 16, 1954, ch. 736, 68A Stat. 439; Pub. L. 86–778, title V, § 523(a), Sept. 13, 1960, 74 Stat. 980; Pub. L. 87–6, § 14(a), Mar. 24, 1961, 75 Stat. 16; Pub. L. 88–31, § 2(a), May 29, 1963, 77 Stat. 51; Pub. L. 91–373, title III, § 301(a), Aug. 10, 1970, 84 Stat. 713; Pub. L. 92–329, § 2(a), June 30, 1972, 86 Stat. 398; Pub. L. 94–455, title XIX, § 1903(a)(11), Oct. 4, 1976, 90 Stat. 1808; Pub. L. 94–566, title II, § 211(b), Oct. 20, 1976, 90 Stat. 2676; Pub. L. 97–248, title II, § 271(b)(1), (c)(1), Sept. 3, 1982, 96 Stat. 554, 555; Pub. L. 99–514, title XVIII, § 1899A(42), Oct. 22, 1986, 100 Stat. 2960; Pub. L. 100–203, title IX, § 9153(a), Dec. 22, 1987, 101 Stat. 1330–326; Pub. L. 101–508, title XI, § 11333(a), Nov. 5, 1990, 104 Stat. 1388–470; Pub. L. 102–164, title IV, § 402, Nov. 15, 1991, 105 Stat. 1061; Pub. L. 103–66, title XIII, § 13751, Aug. 10, 1993, 107 Stat. 664; Pub. L. 105–34, title X, § 1035, Aug. 5, 1997, 111 Stat. 937; Pub. L. 110–140, title XV, § 1501(a), Dec. 19, 2007, 121 Stat. 1800; Pub. L. 110–343, div. B, title IV, § 404(a), Oct. 3, 2008, 122 Stat. 3860; Pub. L. 111–92, § 10(a), Nov. 6, 2009, 123 Stat. 2988; Pub. L. 115–141, div. U, title IV, § 401(b)(37), Mar. 23, 2018, 132 Stat. 1204.) Editorial Notes AMENDMENTS 2018—Pub. L. 115–141 substituted ‘‘equal to 6 percent of the total wages (as defined in section 3306(b)) paid by such employer during the calendar year with respect to employment (as defined in section 3306(c)).’’ for ‘‘equal to— ‘‘(1) 6.2 percent in the case of calendar years 1988 through 2010 and the first 6 months of calendar year 2011; or ‘‘(2) 6.0 percent in the case of the remainder of cal- endar year 2011 and each calendar year thereafter; Page 2762 TITLE 26—INTERNAL REVENUE CODE § 3301 of the total wages (as defined in section 3306(b)) paid by him during the calendar year (or portion of the cal- endar year) with respect to employment (as defined in section 3306(c)).’’ 2009—Pub. L. 111–92 inserted ‘‘(or portion of the cal- endar year)’’ after ‘‘during the calendar year’’ in con- cluding provisions and substituted ‘‘through 2010 and the first 6 months of calendar year 2011’’ for ‘‘through 2009’’ in par. (1) and ‘‘the remainder of calendar year 2011’’ for ‘‘calendar year 2010’’ in par. (2). 2008—Par. (1). Pub. L. 110–343, § 404(a)(1), substituted ‘‘through 2009’’ for ‘‘through 2008’’. Par. (2). Pub. L. 110–343, § 404(a)(2), substituted ‘‘cal- endar year 2010’’ for ‘‘calendar year 2009’’. 2007—Par. (1). Pub. L. 110–140, § 1501(a)(1), substituted ‘‘2008’’ for ‘‘2007’’. Par. (2). Pub. L. 110–140, § 1501(a)(2), substituted ‘‘2009’’ for ‘‘2008’’. 1997—Par. (1). Pub. L. 105–34, § 1035(1), substituted ‘‘2007’’ for ‘‘1998’’. Par. (2). Pub. L. 105–34, § 1035(2), substituted ‘‘2008’’ for ‘‘1999’’. 1993—Par. (1). Pub. L. 103–66, § 13751(1), substituted ‘‘1998’’ for ‘‘1996’’. Par. (2). Pub. L. 103–66, § 13751(2), substituted ‘‘1999’’ for ‘‘1997’’. 1991—Par. (1). Pub. L. 102–164, § 402(1), substituted ‘‘1996’’ for ‘‘1995’’. Par. (2). Pub. L. 102–164, § 402(2), substituted ‘‘1997’’ for ‘‘1996’’. 1990—Par. (1). Pub. L. 101–508, § 11333(a)(1), substituted ‘‘1988 through 1995’’ for ‘‘1988, 1989, and 1990’’. Par. (2). Pub. L. 101–508, § 11333(a)(2), substituted ‘‘1996’’ for ‘‘1991’’. 1987—Pars. (1), (2). Pub. L. 100–203 amended pars. (1) and (2) generally. Prior to amendment, pars. (1) and (2) read as follows: ‘‘(1) 6.2 percent, in the case of a calendar year begin- ning before the first calendar year after 1976, as of Jan- uary 1 of which there is not a balance of repayable ad- vances made to the extended unemployment compensa- tion account (established by section 905(a) of the Social Security Act); or ‘‘(2) 6.0 percent, in the case of such first calendar year and each calendar year thereafter;’’. 1986—Par. (1). Pub. L. 99–514 substituted ‘‘unemploy- ment’’ for ‘‘unemployed’’. 1982—Par. (1). Pub. L. 97–248, § 271(c)(1)(A), substituted ‘‘6.2 percent’’ for ‘‘3.5 percent’’. Pub. L. 97–248, § 271(b)(1), substituted ‘‘3.5 percent’’ for ‘‘3.4 percent’’. Par. (2). Pub. L. 97–248, § 271(c)(1)(B), substituted ‘‘6.0 percent’’ for ‘‘3.2 percent’’. 1976—Pub. L. 94–566 substituted provisions imposing an excise tax equal to 3.4 percent, in the case of a cal- endar year beginning before the first calendar year after 1976, as of January 1 of which there is not a bal- ance of repayable advances made to the extended un- employed compensation account (established by sec- tion 905(a) of the Social Security Act), or 3.2 percent, in the case of such first calendar year and each calendar year thereafter, of the total wages (as defined in sec- tion 3306(b)) paid by him during the calendar year with respect to employment (as defined in section 3306(c)), for provisions imposing an excise tax for the calendar year 1970 and each calendar year thereafter, with re- spect to having individuals in his employ, equal to 3.2 percent of the total wages (as defined in section 3306(b)) paid by him during the calendar year with respect to employment (as defined in section 3306(c)) and provi- sions that, in the case of wages paid during the cal- endar year 1973, the rate of such tax should be 3.28 per- cent in lieu of 3.2 percent. Pub. L. 94–455 substituted ‘‘each calendar year’’ for ‘‘the calendar year 1970 and each calendar year there- after’’ and struck out provisions relating to the rate of tax in the case of wages paid during the calendar year 1973. 1972—Pub. L. 92–329 inserted provisions setting forth the rate of tax in the case of wages paid during the cal- endar year 1973. 1970—Pub. L. 91–373 increased the rate from 3.1 per- cent to 3.2 percent and struck out provisions setting special rates for wages paid during 1962 and 1963. 1963—Pub. L. 88–31 reduced the tax rate for the year 1963 from 3.5 percent to 3.35 percent. 1961—Pub. L. 87–6 provided for a tax rate of 3.5 per- cent for calendar years 1962 and 1963. 1960—Pub. L. 86–778 substituted ‘‘1961’’ for ‘‘1955’’ and ‘‘3.1 percent’’ for ‘‘3 percent’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2009 AMENDMENT Pub. L. 111–92, § 10(b), Nov. 6, 2009, 123 Stat. 2989, pro- vided that: ‘‘The amendments made by this section [amending this section] shall apply to wages paid after December 31, 2009.’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–343, div. B, title IV, § 404(b), Oct. 3, 2008, 122 Stat. 3860, provided that: ‘‘The amendments made by this section [amending this section] shall apply to wages paid after December 31, 2008.’’ EFFECTIVE DATE OF 2007 AMENDMENT Pub. L. 110–140, title XV, § 1501(b), Dec. 19, 2007, 121 Stat. 1800, provided that: ‘‘The amendments made by this section [amending this section] shall apply to wages paid after December 31, 2007.’’ Amendment by Pub. L. 110–140 effective on the date that is 1 day after Dec. 19, 2007, see section 1601 of Pub. L. 110–140, set out as an Effective Date note under sec- tion 1824 of Title 2, The Congress. EFFECTIVE DATE OF 1990 AMENDMENT Pub. L. 101–508, title XI, § 11333(b), Nov. 5, 1990, 104 Stat. 1388–470, provided that: ‘‘The amendments made by this section [amending this section] shall apply to wages paid after December 31, 1990.’’ EFFECTIVE DATE OF 1987 AMENDMENT Pub. L. 100–203, title IX, § 9153(b), Dec. 22, 1987, 101 Stat. 1330–326, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to wages paid on or after January 1, 1988.’’ EFFECTIVE DATE OF 1982 AMENDMENT Pub. L. 97–248, title II, § 271(d)(1), (2), formerly § 271(b)(1), (2), Sept. 3, 1982, 96 Stat. 555, as redesignated by Pub. L. 98–601, § 1(a), Oct. 30, 1984, 98 Stat. 3147, pro- vided that: ‘‘(1) SUBSECTIONS (a) AND (b).—The amendments made by subsections (a) and (b) [amending this section, sec- tions 3306 and 6157 of this title, and sections 1101 and 1105 of Title 42, The Public Health and Welfare] shall apply to remuneration paid after December 31, 1982. ‘‘(2) SUBSECTION (c).—The amendments made by sub- section (c) [amending this section, sections 3302 and 6157 of this title, and section 1101 of Title 42] shall apply to remuneration paid after December 31, 1984.’’ EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94–566, title II, § 211(d)(2), Oct. 20, 1976, 90 Stat. 2677, provided that: ‘‘The amendment made by sub- section (b) [amending this section] shall apply to remu- neration paid after December 31, 1976.’’ EFFECTIVE DATE OF 1970 AMENDMENT Pub. L. 91–373, title III, § 301(a), Aug. 10, 1970, 84 Stat. 713, provided that the amendment made by that section is effective with respect to remuneration paid after Dec. 31, 1969. EFFECTIVE DATE OF 1960 AMENDMENT Pub. L. 86–778, title V, § 523(c), Sept. 13, 1960, 74 Stat. 982, provided that: ‘‘The amendments made by sub- section (a) [amending this section] shall apply only Page 2763 TITLE 26—INTERNAL REVENUE CODE § 3302 with respect to the calendar year 1961 and calendar years thereafter.’’ SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining li- ability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. § 3302. Credits against tax (a) Contributions to State unemployment funds (1) The taxpayer may, to the extent provided in this subsection and subsection (c), credit against the tax imposed by section 3301 the amount of contributions paid by him into an un- employment fund maintained during the taxable year under the unemployment compensation law of a State which is certified as provided in sec- tion 3304 for the 12-month period ending on Octo- ber 31 of such year. (2) The credit shall be permitted against the tax for the taxable year only for the amount of contributions paid with respect to such taxable year. (3) The credit against the tax for any taxable year shall be permitted only for contributions paid on or before the last day upon which the taxpayer is required under section 6071 to file a return for such year; except that credit shall be permitted for contributions paid after such last day, but such credit shall not exceed 90 percent of the amount which would have been allowable as credit on account of such contributions had they been paid on or before such last day. (4) Upon the payment of contributions into the unemployment fund of a State which are re- quired under the unemployment compensation law of that State with respect to remuneration on the basis of which, prior to such payment into the proper fund, the taxpayer erroneously paid an amount as contributions under another unemployment compensation law, the payment into the proper fund shall, for purposes of credit against the tax, be deemed to have been made at the time of the erroneous payment. If, by reason of such other law, the taxpayer was entitled to cease paying contributions with respect to serv- ices subject to such other law, the payment into the proper fund shall, for purposes of credit against the tax, be deemed to have been made on the date the return for the taxable year was filed under section 6071. (5) In the case of wages paid by the trustee of an estate under title 11 of the United States Code, if the failure to pay contributions on time was without fault by the trustee, paragraph (3) shall be applied by substituting ‘‘100 percent’’ for ‘‘90 percent’’. (b) Additional credit In addition to the credit allowed under sub- section (a), a taxpayer may credit against the tax imposed by section 3301 for any taxable year an amount, with respect to the unemployment compensation law of each State certified as pro- vided in section 3303 for the 12-month period ending on October 31 of such year, or with re- spect to any provisions thereof so certified, equal to the amount, if any, by which the con- tributions required to be paid by him with re- spect to the taxable year were less than the con- tributions such taxpayer would have been re- quired to pay if throughout the taxable year he had been subject under such State law to the highest rate applied thereunder in such 12- month period to any person having individuals in his employ, or to a rate of 5.4 percent, which- ever rate is lower. (c) Limit on total credits (1) The total credits allowed to a taxpayer under this section shall not exceed 90 percent of the tax against which such credits are allow- able. (2) If an advance or advances have been made to the unemployment account of a State under title XII of the Social Security Act, then the total credits (after applying subsections (a) and (b) and paragraph (1) of this subsection) other- wise allowable under this section for the taxable year in the case of a taxpayer subject to the un- employment compensation law of such State shall be reduced— (A)(i) in the case of a taxable year beginning with the second consecutive January 1 as of the beginning of which there is a balance of such advances, by 5 percent of the tax imposed by section 3301 with respect to the wages paid by such taxpayer during such taxable year which are attributable to such State; and (ii) in the case of any succeeding taxable year beginning with a consecutive January 1 as of the beginning of which there is a balance of such advances, by an additional 5 percent, for each such succeeding taxable year, of the tax imposed by section 3301 with respect to the wages paid by such taxpayer during such tax- able year which are attributable to such State; (B) in the case of a taxable year beginning with the third or fourth consecutive January 1 as of the beginning of which there is a balance of such advances, by the amount determined by multiplying the wages paid by such tax- payer during such taxable year which are at- tributable to such State by the percentage (if any), multiplied by a fraction, the numerator of which is the State’s average annual wage in covered employment for the calendar year in which the determination is made and the de- nominator of which is the wage base under this chapter, by which— (i) 2.7 percent multiplied by a fraction, the numerator of which is the wage base under this chapter and the denominator of which is the estimated United States average annual wage in covered employment for the cal- endar year in which the determination is to be made, exceeds (ii) the average employer contribution rate for such State for the calendar year pre- ceding such taxable year; and