Glossary

FUTA

Federal unemployment tax, paid by employers on the first $7,000 of each employee's wages.

The Federal Unemployment Tax Act funds the federal share of the unemployment system. Employers — including household employers who cross the threshold — pay it on the first $7,000 of each employee's annual wages, at a 6.0% gross rate reduced to an effective 0.6% where the full state credit is available. Employees pay nothing toward FUTA. It is separate from state unemployment tax, which has its own rate and its own, usually higher, taxable wage base.

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