1. What are FUTA and SUTA Taxes?

FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act) are payroll taxes that fund unemployment benefits. Employers pay these taxes, not employees.

2. How the Calculator Works

The calculator uses these simple equations:

Where:

• Taxable wages — The portion of wages subject to unemployment taxes (first $7,000 per employee for FUTA)
• State rate — Your state's unemployment tax rate (varies by state and employer history)
• 0.06 — The federal unemployment tax rate (6% before credits)

3. Importance of Unemployment Taxes

Details: These taxes fund unemployment benefits for workers who lose their jobs. Proper calculation ensures compliance with federal and state laws.

4. Using the Calculator

Tips: Enter total taxable wages (up to $7,000 per employee for FUTA) 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 wage base limit for FUTA?
A: FUTA applies only to the first $7,000 paid to each employee annually.

Q2: How is the SUTA rate determined?
A: States assign rates based on your layoff history (experience rating) and state fund solvency.

Q3: Can I get a credit against FUTA?
A: Yes, you typically get up to 5.4% credit for paying state unemployment taxes, making the effective FUTA rate 0.6%.

Q4: When are these taxes due?
A: FUTA is filed quarterly with Form 940. SUTA due dates vary by state.

Q5: Are all wages taxable?
A: Most wages are taxable, but some states exclude certain types of compensation.