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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.

2018 State Unemployment Insurance Taxable Wage Base

Bolded states changed, either increased or decreased, from 2017 to 2018.

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