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 paid to the federal government while SUTA is paid to state governments.

2. How FUTA and SUTA Calculations Work

The calculations use these simple formulas:

Where:

• Taxable Wages — The portion of employee wages subject to unemployment taxes (first $7,000 per employee for FUTA)
• 0.06 — Current FUTA tax rate (6% of first $7,000 per employee)
• State Rate — Varies by state and employer's experience rating (typically 1-10%)

3. Importance of Accurate Calculation

Details: Proper calculation ensures compliance with tax laws, avoids penalties, and helps with accurate financial planning. FUTA and SUTA taxes are employer-paid (not deducted from employee wages).

4. Using the Calculator

Tips: Enter total taxable wages (sum for all employees up to wage base limits) and your state unemployment tax rate as a decimal (e.g., 0.054 for 5.4%).

5. Frequently Asked Questions (FAQ)

Q1: What's the FUTA wage base?
A: Currently $7,000 per employee per year. Only the first $7,000 of each employee's wages are subject to FUTA tax.

Q2: Do all states have SUTA tax?
A: Yes, all states have unemployment taxes but rates and wage bases vary. Some states call it SUI (State Unemployment Insurance) instead of SUTA.

Q3: Can I get a credit against FUTA for SUTA paid?
A: Yes, employers can claim up to 5.4% credit against the 6% FUTA tax when they pay state unemployment taxes on time.

Q4: How often are these taxes paid?
A: FUTA is typically paid quarterly if liability exceeds $500. SUTA payment frequency varies by state.

Q5: What affects my SUTA rate?
A: SUTA rates depend on state schedules and your "experience rating" (claims history). Lower turnover employers typically get lower rates.