Work out your 2026 federal unemployment tax from the $7,000 wage base, the 5.4% state credit, and any credit-reduction surcharge that applies in your state.
Enter your payroll figures and press Calculate.
Situation: A small bakery pays eight full-time employees $45,000 each and pays its state unemployment tax on time, so it earns the full 5.4% credit.
How it's computed: Only the first $7,000 of each employee's wages is FUTA-taxable: 8 × $7,000 = $56,000. At the 6.0% gross rate that is $3,360, minus the $3,024 maximum credit, leaving 0.6% × $56,000.
Taxable wages $56,000; net FUTA owed $336 (after the $3,024 state credit).
Situation: A staffing firm pays 25 employees $60,000 each. Its state took federal UI advances, triggering a 0.3% FUTA credit reduction for the year.
How it's computed: Taxable wages are 25 × $7,000 = $175,000. The base net tax is 0.6% × $175,000 = $1,050, and the credit-reduction surcharge adds 0.3% × $175,000 on top.
Taxable wages $175,000; net FUTA with credit reduction $1,575 (base $1,050 + $525 surcharge).
Situation: A tech startup with three employees earning $90,000 each discovers the wage base caps its FUTA exposure far below payroll totals.
How it's computed: Wages far exceed the $7,000 cap, so only 3 × $7,000 = $21,000 is taxable — exactly the same taxable base as if they earned $7,000.
Taxable wages $21,000; net FUTA owed $126 despite $270,000 of total payroll.
FUTA (Federal Unemployment Tax Act) tax is paid entirely by the employer — nothing is withheld from employees. It applies only to the first $7,000 of each employee's wages each year.
Net rate = 6.0% gross − 5.4% maximum state credit = 0.6%. A credit-reduction state adds its reduction percentage on top of 0.6%.
So the standard annual FUTA cost is $42 per employee (0.6% × $7,000) where the full credit applies. A 0.3% credit reduction raises that to 0.9% × $7,000 = $63 per employee.
In 2025-2026 several states carried credit reductions; the rate is published each November in IRS Form 940 Schedule A.
You deposit FUTA quarterly only if your accumulated liability exceeds $500 for the quarter. Most small employers reach the threshold once headcount passes roughly 12 employees.
| Quarter | Accrual per employee | Deposit due |
|---|---|---|
| Q1 | $10.50 (0.6% × $1,750) | April 30 |
| Q2 | $10.50 | July 31 |
| Q3 | $10.50 | October 31 |
| Q4 | $10.50 + year-end true-up | January 31 |
Assumes the full 5.4% credit. Form 940 is filed annually by January 31.
⚠️ Important: This calculator uses the standard 6.0% gross FUTA rate, the maximum 5.4% credit and the $7,000 wage base. Actual liability depends on your state's credit-reduction status for the year, whether you qualify for the full credit, and your deposit history. Always confirm with IRS Form 940 instructions before filing.
Any employer with at least one employee who was paid $1,500 or more in any calendar quarter, or had any employee for at least 20 different weeks, must pay FUTA. Household employers — including families paying a nanny more than $2,800 in a year — are also liable and may need Schedule H with their personal return.
FUTA is separate from state unemployment tax (SUTA) and from the Social Security and Medicare taxes you withhold. Each has its own wage base, rate and deposit schedule.
FUTA is federal, uniform across states, and capped at the first $7,000 of wages. SUTA is state-run, has its own wage base (often $10,000-$50,000+) and its own experience-rated rate that rises when you lay off workers. The 5.4% FUTA credit exists precisely because the state tax is paid first; if state rates are low or late, you lose part of the federal credit.