{"id":3036,"date":"2026-01-12T23:11:55","date_gmt":"2026-01-13T05:11:55","guid":{"rendered":"https:\/\/www.zoomshift.com\/blog\/?p=3036"},"modified":"2026-03-31T10:49:50","modified_gmt":"2026-03-31T15:49:50","slug":"federal-unemployment-tax-act","status":"publish","type":"post","link":"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/","title":{"rendered":"Federal Unemployment Tax Act (FUTA)"},"content":{"rendered":"<h2><span class=\"ez-toc-section\" id=\"what-is-futa-payroll-tax\"><\/span>What Is FUTA Payroll Tax?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The Federal Unemployment Tax Act, or FUTA, is a federal law stipulating that employers must pay payroll taxes for their employees.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"who-must-pay-futa-tax\"><\/span>Who Must Pay FUTA Tax?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Generally speaking, most employers will need to pay FUTA taxes, and it\u2019s against the law for the amount of the tax to be withheld from an employee. All employees must be counted when calculating the tax, including part-time and full-time. Independent contractors and other non-employee workers do not count.<\/p>\n<p>The specific requirements for employers paying this tax are that:<\/p>\n<ul>\n<li>They must pay the tax if the employee has been paid at least $1500 in any given quarter<\/li>\n<li>They must pay the tax if they employed at least one employee for part of a day for at least 20 weeks in any given year<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"who-is-exempt-from-paying-futa\"><\/span>Who Is Exempt from Paying FUTA?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The IRS stipulates various exemptions from the FUTA tax, which can be found in the <a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/i940.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">instructions for Form 940<\/a>. The most basic exemption is businesses that do not meet the above criteria.<\/p>\n<p>There are also additional exemptions for employers of household employees, agricultural employers, Indian tribal governments, tax-exempt organizations, and state or local government employers based on different criteria.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"how-to-calculate-the-cut-off-mark-for-futa\"><\/span>How to Calculate the Cut-Off Mark for FUTA<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>When calculating the FUTA cut-off mark, there are a few things you need to take into consideration:<\/p>\n<ul>\n<li>An employer only has to pay FUTA tax on employees&#8217; first $7000<\/li>\n<li>The tax rate for FUTA is 6%<\/li>\n<li>An employer is allowed a credit of no more than 5.4% for FUTA tax (based on how much is contributed to state unemployment funds)<\/li>\n<\/ul>\n<p>It then becomes a simple formula of multiplying each of your employees&#8217; wages that have been paid (up to the $7000) by 0.6%. Once you have each of these individual totals, you simply need to add them together.<\/p>\n<p>******<\/p>\n<p><em>See our full list of over 50 Small Business Terms <a href=\"https:\/\/www.zoomshift.com\/blog\/small-business-glossary\/\" target=\"_blank\" rel=\"noopener noreferrer\">here<\/a>.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What Is FUTA Payroll Tax? The Federal Unemployment Tax Act, or FUTA, is a federal law stipulating that employers must pay payroll taxes for their employees. Who Must Pay FUTA Tax? Generally speaking, most employers will need to pay FUTA taxes, and it\u2019s against the law for the amount of the tax to be withheld [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false},"categories":[11],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.10 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Federal Unemployment Tax Act (FUTA)<\/title>\n<meta name=\"description\" content=\"The Federal Unemployment Tax Act, or FUTA, is a federal law stipulating that employers must pay payroll taxes for their employees.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Federal Unemployment Tax Act (FUTA)\" \/>\n<meta property=\"og:description\" content=\"The Federal Unemployment Tax Act, or FUTA, is a federal law stipulating that employers must pay payroll taxes for their employees.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/\" \/>\n<meta property=\"og:site_name\" content=\"Zoomshift\" \/>\n<meta property=\"article:published_time\" content=\"2026-01-13T05:11:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-03-31T15:49:50+00:00\" \/>\n<meta name=\"author\" content=\"ZoomShift\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"ZoomShift\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/\",\"url\":\"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/\",\"name\":\"Federal Unemployment Tax Act (FUTA)\",\"isPartOf\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#website\"},\"datePublished\":\"2026-01-13T05:11:55+00:00\",\"dateModified\":\"2026-03-31T15:49:50+00:00\",\"author\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/9ba35c556ffdf9d8dab06992b17a4b0d\"},\"description\":\"The Federal Unemployment Tax Act, or FUTA, is a federal law stipulating that employers must pay payroll taxes for their employees.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/federal-unemployment-tax-act\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.zoomshift.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Federal Unemployment Tax Act (FUTA)\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#website\",\"url\":\"https:\/\/www.zoomshift.com\/blog\/\",\"name\":\"Zoomshift\",\"description\":\"SMB Management Blog\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.zoomshift.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/9ba35c556ffdf9d8dab06992b17a4b0d\",\"name\":\"ZoomShift\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/05af010fb3485fa8095793cfff89a5e6?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/05af010fb3485fa8095793cfff89a5e6?s=96&d=mm&r=g\",\"caption\":\"ZoomShift\"},\"description\":\"The leading scheduling software designed for hourly employees. 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