Federal unemployment tax – FUTA

What is the federal unemployment tax (FUTA)?

Federal and state unemployment taxes are paid by employers and provide compensation to individuals who have lost their jobs. The federal unemployment tax rate is 6 percent. However, the IRS assumes employers will pay states at the rate of 5.4 percent, so only the remaining 0.6 percent is actually paid toward the federal rate. The Federal unemployment tax wage base is $7,000, meaning only the first $7,000 of employees’ wages are subject to the tax. Employers pay the FUTA tax, therefore it is not deducted from employee wages.

Does your business have to pay the FUTA tax?

Employers owe FUTA taxes if they meet one of the following requirements:

  • If they paid employee wages of at least $1,500 in any calendar quarter in 2014 or 2015, OR
  • If they had at least one employee, who worked at least one day per week for 20 consecutive weeks in 2014 or 2015.

Wages exempt from FUTA

Certin wages are exempt from the FUTA tax, including insurance premiums and other fringe benefits. Other exclusions can be found here:

State unemployment tax – SUTA

What is the state unemployment tax – (SUTA)?

Employers pay state unemployment insurance contributions based on what they pay their employees, up to a certain state wage base. Some states use the same wage base as the federal wage base (of $7,000), others do not.

2020 state unemployment insurance taxable wage base

State 2020 Wage Base 2019 Wage Base 2018 Wage Base 2017 Wage Base % Increase/Decrease
Alabama $8,000 $8,000 $8,000 $8,000
Alaska 41,500 39,900 39,500 39,800
Arizona 7,000 7,000 7,000 7,000
Arkansas 7,000 10,000 10,000 12,000 -16.67%
California 7,000 7,000 7,000 7,000
Colorado 13,600 13,100 12,600 12,500 +0.61%
Connecticut 15,000 15,000 15,000 15,000
Delaware 16,500 16,500 16,500 18,500 -10.81%
District of Columbia 9,000 9,000 9,000 9,000
Florida 7,000 7,000 7,000 7,000
Georgia 9,500 9,500 9,500 9,500
Hawaii 48,100 46,800 45,900 44,000
Idaho 41,600 40,000 38,200 37,800 +1.06%
Illinois 12,740 12,960 12,960 12,960
Indiana 9,500 9,500 9,500 9,500
Iowa 31,600 30,600 29,900 29,300 +2.05%
Kansas 14,000 14,000 14,000 14,000
Kentucky 10,800 10,500 10,200 10,200
Louisiana 7,700 7,700 7,700 7,700
Maine 12,000 12,000 12,000 12,000
Maryland 8,500 8,500 8,500 8,500
Massachusetts 15,000 15,000 15,000 15,000
Michigan 9,500 9,500 9,500 9,500
Minnesota 35,000 34,000 32,000 32,000
Mississippi 14,000 14,000 14,000 14,000
Missouri 11,500 12,000 12,500 13,000 -3.85%
Montana 34,100 33,000 32,000 31,400 +1.91%
Nebraska 9,000 9,000 9,000 9,000
Nevada 32,500 31,200 30,500 29,500 +3.39%
New Hampshire 14,000 14,000 14,000 14,000
New Jersey 35,300 34,400 33,700 33,500 +0.60%
New Mexico 25,800 24,800 24,200 24,300 -0.41%
New York 11,600 11,400 11,100 10,900 +1.83%
North Carolina 25,200 24,300 23,500 23,100 +1.73%
North Dakota 37,900 36,400 35,500 35,100
Ohio 9,000 9,500 9,500 9,000 +5.55%
Oklahoma 18,700 18,100 17,600 17,700 -0.56%
Oregon 42,100 40,600 39,300 38,400 +2.34%
Pennsylvania 10,000 10,000 10,000 9,750 +2.56%
Puerto Rico 7,000
Rhode Island 24,000 23,600 23,000 22,400
South Carolina 14,000 14,000 14,000 14,000
South Dakota 15,000 15,000 15,000 15,000
Tennessee 7,000 8,000 8,000
Texas 9,000 9,000 9,000 9,000
Utah 36,600 35,300 34,300 33,100 +3.63%
Vermont 16,100 15,600 17,600 17,300 +1.73%
Virgin Islands 23,500
Virginia 8,000 8,000 8,000 8,000
Washington 52,700 49,800 47,300 45,000 +5.11%
West Virginia 12,000 12,000 12,000 12,000
Wisconsin 14,000 14,000 14,000 14,000
Wyoming 26,400 25,400 24,700 25,400 -2.76%