SUTA and FUTA Calculations
These taxes are paid by employers. Employees do not have to match these taxes on their
payroll deductions.
State Unemployment Tax Act (SUTA). The base rate is 5.4% but many states have a
merit rating system which decreases the employers rate due to working with employees
to keep them employed. The base dollar amount for the cap is $7,000 per year on each
individual employee’s income per year but each state can set its own cap.
Federal Unemployment Tax Act (FUTA). The base rate is .8%. The state and federal rate
together is 6.2% but the Federal allows a credit of 5.4% to an employer which reduces the
FUTA rate to .8%. No employer can take more than a 5.4% credit against the FUTA
rate. The cap for the FUTA is $7,000 per year on each employee’s yearly income.
Example
Adolf Hitler
Vlad Tepes
Attila the Hun
Payroll Summary
Quarter 1 Quarter 2
$3,000
$9,000
9,000
15,000
3,100
3,900
Given: Cap is $7,000 for both state and federal and SUTA rate of 5.4% and FUTA rate of .8%
Above is a payroll summary of earnings for the first two quarters of the year.
First Quarter taxable income:
Adolf Hitler
3,000
Vlad Tepes
Attila the Hun
Total
FUTA
SUTA
MJC Revised 1/2012
7,000 The cap is $7,000 per year
3,100
13,100 Taxable income
$13,100 X .8% = $104.80
$13,100 X .8% = $104.80
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SUTA and FUTA Calculations
Second Quarter taxable income:
Adolf Hitler
4,000 (7,000 – 3,000 = 4,00
Vlad Tepes
0 Went over the cap in First Quarter
Attila the Hun
3,900 (7,000 – 3,100 = 3,900)
Total
7,900 Taxable income
FUTA
$7,900 X .8% = $63.20 FUTA
SUTA
$7,900 X 5.4% = $426.60 SUTA
MJC Revised 1/2012
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