How does unemployment work for employers?

FUTA. FUTA on payroll taxes is the Federal Unemployment Tax Act (FUTA). This is an act associated with state unemployment systems and provides payments in the form of unemployment compensation to workers who have lost their jobs.

The majority of employers pay both state unemployment tax and federal unemployment tax.

FUTA tax rate. The FUTA tax rate is 6.0% and applies to the first $7,000 an employer pays an employee as wages during a given tax year. This $7,000 figure is commonly referred to as the FUTA or federal wage base.

Individual state wage bases can differ based on different rules and guidelines associated with each state.

FUTA qualifiers. In some cases, FUTA taxes might have to be paid before an employer files their return.

Almost all employers are responsible for paying FUTA as it applies to any employer with at least one employee who works at least 20 weeks out of a tax year or has paid at least $1,500 in any quarter.

SUTA. SUTA on payroll taxes is the State Unemployment Act (SUTA) fee. Each state determines its tax rate on SUTA fees. You can determine your company's SUTA rate based on its location.

Companies with employees or offices in multiple states are normally subjected to additional unemployment taxes. This includes remote workers as well.