Federal Unemployment Tax Act

Dec 28th, 2023

The Federal Unemployment Tax Act is a federal payroll tax that helps in funding the unemployment benefits. In this blog, we shall talk about FUTA, its most current taxes, and how much you need to pay for FUTA. If you want to create paystub you should visit eFormscreator.

What is FUTA Tax?

The Federal Unemployment Tax Act (FUTA) establishes a federal payroll tax for American businesses and organizations, which helps fund programs and benefits for unemployed citizens.

FUTA was created in 1939 as an answer to the events of the Great Depression and today assists similar, state-based programs that are often funded by the State Unemployment Tax Acts (SUTA).

Who pays FUTA Tax Rate?

As per the IRS, a business shall pay unemployment taxes if it meets the bracket of any of these three tests:

General Test: Businesses that have spent $1,500 or more in wages to any employee in any quarter of the year for at least some part of a day across any 20 different weeks of the year.

Household Employee Test: Businesses that spent $1,000 or more in cash to the household workers in any quarter of the year.

Farmworker Test: Businesses that spent $20,000 or more in cash to the farmworkers in any quarter of the year or at least some part of a day across any of the 20 different weeks of the year.

2024 FUTA Tax Rate

The 2024 futa tax rate is 6% of the first $7,000 from every employee’s annual wages. For example, if Employer XYZ pays one employee $15,000 annually and another $5,000 annually, it would pay a total of $720 in unemployment taxes as only one employee earns over $7,000 a year. Because the other employee earns only $5,000 annually, Employer XYZ will only pay 6.0% of that $5,000.

Employee Current FUTA Tax Rate  Total Unemployment Tax Owed
Employee A 0.06 x $7,000= $420
Employee B 0.0.6 x $5,000= $300 $420 + $300 = $720 

How To Pay FUTA Taxes?

Organizations with a Federal Employer Identification Number can make a FUTA tax payment in the form of an Electronic Transfer Fund (ETF) to the Department of Treasurey’s Electronic Federal Tax Payment System (EFTPS).

FUTA taxes are generally due one month after the end of a quarter. Still, if an organization only collected $500 in FUTA taxes for a quarter, it could wait until the following quarters to deposit the funds.

Quarter Quarter End Date Deposit Due Date
Q1 (Jan, Feb , March) March 31 April 30
Q2 (Apr, May, June) June 30 July 31
Q3(July, Aug, Sept) September 30 October 31
Q4(Oct, Nov, Dec) December 31 Janauary 31

How To Calculate Futa Tax Rate?

To calculate the FUTA tax rate on a worker’s annual wages:

Add up all of the taxable wages paid to an employee in a calendar year. For example, you pay your employee Roger $7000 in December 2022 and another $8,500 in January 2023. If you add these figures together for a total of $15,500.

If, during that same period, you paid employee Jack only $5,000 of wages subjected to the FUTA taxes, then your total is still $15,500. Multiply these amounts by 0.07. In this case, it would be $120.00.

Paying FUTA taxes to the IRS

Generally, employers must deposit their FUTA tax liability to the U.S. Treasury via the Electronic Federal Tax Payment System.

The business also needs to report FUTA by filing Form 9040 by the end of January 31st of the particular year as a part of its annual tax returns.


Filing and paying the FUTA rate is a simple process. As long as you have a basic understanding of how much you owe and when the payments are due. Failure to pay the FUTA rate can lead to significant penalties, including fines and criminal charges. If you are looking for a free paystub generator, eFormscreator is your perfect solution.