FUTA is a joint federal-state government program to provide cash benefits to employees during temporary periods of unemployment. The benefits are funded by a tax (denominated a “contribution”) measured by wages an employer pays.

Annual and multi-employer limits

FUTA is subject to annual caps for wages received from the same employer, or in some circumstances, successors. When 2 or more related corporations concurrently employ the same individual during a calendar quarter and compensate that individual through a “common paymaster” which is one of the employing corporations, each corporation is considered to have paid only the remuneration actually paid by it to the employee, but the total amount of the employee and employer tax is determined as though the individual had only 1 employer. § § 3121(s) and 3306(p); Regs. § § 31.3121(s)-1(a) and 31.3306(p)-1(a)


  • 1988 -2007 – 6.2%
  • After 2007 6%


  • “Normal” credit for contributions to a state unemployment fund, not to exceed 90% of the deemed federal rate of 6%
    • BUT ONLY if state contributions paid by last day for filing the federal return, or
    • 90% of the otherwise allowed amount IF the state contribution is paid before the expiration of the statute of limitations on refunds and credits
  • “Additional” credit for state contributions at a rate lower than the highest rate up to a maximum total credit of 90% of the 6% deemed federal rate
  • “Successor employers” credit for credits that would have been available to predecessor on acquiring substantially all of the trade or business property of someone not an employer in the year in issue
  • Credits are limited where states receive advances to continue to pay unemployment compensation and do not timely repay them