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 you paid employee wages of at least $1,500 in any calendar quarter.
- If you had at least one employee who worked at least 20 weeks out of the year.
Who is exempt from FUTA and SUTA tax?
Some government entities, nonprofit institutions, religious, charitable, and educational organizations may be exempt from paying FUTA and SUTA taxes. However, most businesses are required to pay FUTA and SUTA taxes if they run payroll.
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% |