Beginning July 1, 2011, the FUTA tax rate will decrease to 6.0%. This change will reduce the effective tax rate for most employers payroll calculation from .8% to .6%.
Federal Unemployment Tax
The Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a Federal and a state unemployment tax. Only the employer pays FUTA tax; it is not deducted from the employee's wages. (For more information, refer to the Instructions for Form 940 )
The FUTA tax rate was 6.2% of taxable wages before. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state.
Before July 1, 2011
For most employers, the net FUTA tax rate is generally 0.8% (6.2% – 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00).
After July 1, 2011
For most employers, the net FUTA tax rate is generally 0.8% (6.0% – 5.4%), for a maximum FUTA tax of $42.00 per employee, per year (.006 X $7,000. = $42.00).
ezPaycheck Payroll software
Halfpricesoft.com will release the updated version of ezPaycheck Payroll Software after we get new instructions of Form 940.