Most employers pay a small fraction of the statutory FUTA rate, thanks to a standard credit — but employers in certain states owe more.
How it works
FUTA applies only to the first $7,000 of each employee’s wages. The statutory 6.0% rate is reduced by a standard 5.4% credit to a 0.6% net rate for most employers — but a state that hasn’t repaid federal unemployment loans triggers a credit reduction, raising the net rate for employers in that state.
What this does not include
This computes federal FUTA only — SUTA, the parallel state-level unemployment tax with its own wage base and employer-specific rate, is a separate, additional tax this site’s SUTA calculator covers.
How to use this calculator
- Enter employee count, average wages, and the FUTA wage base.
- Enter any state credit reduction that applies.
Frequently asked questions
Why is the FUTA wage base so much lower than Social Security’s?
The two are set independently by different statutes — FUTA’s $7,000 base has stayed low for decades, unlike Social Security’s wage base, which is indexed and rises most years.
What triggers a credit reduction?
A state borrowing from the federal government to pay unemployment benefits and failing to repay the loan within the allowed timeframe — the reduction applies to all employers in that state until it’s repaid.
Is FUTA paid by the employee or employer?
Entirely by the employer — unlike Social Security and Medicare, FUTA has no employee-paid portion at all.
