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FUTA Tax Limit

Are you a small business owner with employees? The 2011 FUTA tax limit is a very important part of the taxes you are responsible for. The Federal Unemployment Tax Act (FUTA) is paid entirely by you, the employer. This tax is not withheld from your employee’s wages.

How Much is the FUTA Tax Rate?

The FUTA tax rate is 6.2%, and you are able to take a credit of up to 5.4% of taxable income if you pay state unemployment taxes and they are paid on time. Most states have their own State Unemployment Insurance Tax. If you qualify for the highest credit, which could be as much as 5.4%, then the minimum FUTA rate is 0.8%. Each state has its own new employer rate for new businesses and the length of time that new employers are subject to this rate also varies. You will need to contact your state unemployment office for the new employer rates.