1. What are FUTA and SUTA Taxes?

FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act) are payroll taxes that employers pay to fund unemployment benefits. FUTA is a federal tax, while SUTA rates vary by state.

2. How Are FUTA and SUTA Calculated?

The taxes are calculated using these formulas:

Where:

• Taxable Wages — The portion of employee wages subject to unemployment taxes
• State Rate — The SUTA tax rate set by your state (typically between 1-10%)

Note: Most states have a wage base limit (maximum amount of wages subject to SUTA tax per employee per year).

3. Importance of Calculating These Taxes

Details: Accurate calculation of FUTA and SUTA taxes is essential for payroll compliance. These taxes fund unemployment benefits for workers who lose their jobs.

4. Using the Calculator

Tips: Enter the total taxable wages and your state's unemployment tax rate (as a decimal). The calculator will compute both FUTA (fixed at 6%) and SUTA taxes.

5. Frequently Asked Questions (FAQ)

Q1: What's the current FUTA tax rate?
A: The standard FUTA tax rate is 6% of the first $7,000 paid to each employee annually.

Q2: How do I find my state's SUTA rate?
A: Contact your state's unemployment insurance agency. New employers typically get a standard rate that may adjust based on claims history.

Q3: Are there FUTA tax credits?
A: Yes, employers can claim up to a 5.4% credit for timely paid state unemployment taxes, making the effective FUTA rate 0.6%.

Q4: Who pays FUTA and SUTA taxes?
A: Employers pay both taxes - they are not deducted from employee wages.

Q5: When are these taxes due?
A: FUTA is typically filed quarterly with IRS Form 940. SUTA payment schedules vary by state.