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FUTA tax calculator
Annual FUTA for a group of employees with similar pay.
FUTA for the year$420.00$42.00 per employee at 0.60%
| FUTA wages per employee (first $7,000) | $7,000.00 |
|---|---|
| Gross FUTA at 6.0% | $4,200.00 |
| Credit for state unemployment tax (5.4%) | −$3,780.00 |
| FUTA owed (Form 940) | $420.00 |
Paid by the employer only; nothing is withheld from employees' pay. Deposit by the end of the month after any quarter in which undeposited FUTA tops $500.
How FUTA is calculated
FUTA is figured per employee on the first $7,000 of wages paid in the calendar year[tc759]:
- FUTA wages = the smaller of the employee's wages or $7,000.
- Gross FUTA = FUTA wages × 6.0% = up to $420 per employee.
- Credit = up to 5.4% (up to $378) if you paid your state unemployment tax in full and on time.
- Net FUTA = 0.6% = up to $42 per employee, plus any credit reduction for your state.
With 10 employees each paid $45,000, every one of them passes $7,000, so FUTA wages total $70,000 and net FUTA is $420 in most states. In California the same payroll owes $1,470.
2026 credit reduction states
A credit reduction applies when a state has borrowed from the federal unemployment trust fund (a Title XII advance) and still owes it on January 1 of two or more consecutive years without repaying it by November 10. The reduction starts at 0.3% and grows by 0.3% each additional year[cr].
| Tax year | State | Credit reduction | Net FUTA rate | Net FUTA per employee |
|---|---|---|---|---|
| 2026 (final) | California | 1.5% | 2.1% | $147 |
| 2026 (final) | US Virgin Islands | 0% (advances repaid before Nov 10, 2026) | 0.6% | $42 |
| 2025 | California | 1.2% | 1.8% | $126 |
| 2025 | US Virgin Islands | 4.5% | 5.1% | $357 |
| 2026 | All other states and DC | None | 0.6% | $42 |
The 2026 list is final as of the Department of Labor's November 10, 2026 determination[cr26]; for California the "BCR add-on" was waived. 2025 figures are from the Department's historical file[cr25]. The extra amount is paid with Form 940 for that year, due in January.
Who pays federal unemployment taxes (FUTA)
Employers pay FUTA; employees do not, and it never appears as a deduction on a pay stub. You generally owe it if you paid $1,500 or more in wages in any calendar quarter, or had at least one employee for some part of a day in 20 or more weeks of the year (different tests apply to household and farm employers)[tc759]. The tax funds the federal share of the unemployment insurance system, which each state runs under its own eligibility rules[ui].
- Form 940 reports FUTA once a year, due January 31 (February 10 if all deposits were made on time).
- Deposits: when undeposited FUTA for the year passes $500 at the end of a quarter, deposit it by the last day of the following month.
- State unemployment tax (SUTA) is separate, with its own rate and wage base set by each state. Only Alaska, New Jersey and Pennsylvania also take unemployment contributions from employees' pay.
Employee sideTo see what an employee actually takes home after withholding, use the paycheck calculator; the employee-paid state contributions show on state pages such as the NJ paycheck calculator. For hourly payroll, the time card calculator totals hours first.
Frequently asked questions
What is the federal unemployment tax rate for 2026?
6.0% on the first $7,000 per employee, reduced to 0.6% by the 5.4% credit for state unemployment tax. California employers pay 2.1% for 2026 because of a 1.5% credit reduction.
Is federal unemployment tax taken out of my paycheck?
No. FUTA is paid only by employers. A few states (Alaska, New Jersey, Pennsylvania) take a small state unemployment contribution from wages, but that is state tax, not FUTA.
What are federal unemployment taxes (FUTA) used for?
They pay for administering the unemployment insurance system, fund half of extended benefits, and finance the loans that states borrow when their own trust funds run short.
How much FUTA do I owe per employee?
At most $42 a year per employee in a state without a credit reduction ($7,000 × 0.6%), and $147 per employee in California for 2026.