Income taxes: credits: unemployment insurance tax.

The Personal Income Tax Law and the Corporation Tax Law authorize various credits against the taxes imposed by those laws. Unemployment compensation is a joint federal and state program funded by federal and state unemployment taxes paid by employers with benefits paid by the state. Tax is imposed under both laws on the first $7,000 annually paid by an employer to an employee. Existing federal law, the Federal Unemployment Tax Act, provides a credit against this tax for contributions made to certified state unemployment compensation programs, but reduces this credit when a state has a debt to the Federal Unemployment Trust Account, thus requiring employers to pay more federal unemployment tax. California has a debt to the Federal Unemployment Trust Account. This bill, under both laws, for taxable years beginning on or after January 1, 2017, would allow a credit to employers in an amount equal to the reduction in credit under the Federal Unemployment Tax Act due to the state borrowing from the Federal Unemployment Trust Account. This bill would take effect immediately as a tax levy.