Simple and Feature-loaded Payroll Software for Small Businesses

Payroll Software

Subscribe to Payroll Software: eMailAlertsEmail Alerts newslettersWeekly Newsletters
Get Payroll Software: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


Payroll Software Authors: Casey Yang

Blog Post

FUTA (Federal Unemployment Tax) Rate Reduced to .6% as of 7/1/2011

Beginning July 1, 2011, the FUTA tax rate will decrease to 6.0%

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 )

FUTA Calulations:
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).

Source:

http://www.halfpricesoft.com/business-blog/post/2011/07/01/FUTA-(Federal-Unemployment-Tax)-rate-reduced-to-625-as-of-712011.aspx

More Stories By Casey Yang

I work for halfpricesoft.com. Halfpricesoft.com is a leading provider of easy-to-use 1099, W2 and Payroll Software solutions for accountants and small to medium size businesses. And its small business software can save user both time and money. For more information, visit http://www.halfpricesoft.com