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March 30, 2017

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Vince earned $32,876 last year. The state unemployment tax paid by his employer is 5.4% of the first $7,000 earned in a year. How much SUTA tax must Vince’s employer pay for him? How much FUTA tax must Vince’s employer pay?

  • Math - ,

    SUTA tax (5.4% for first $7000)
    =7000*0.054
    =$378

    Equivalent FUTA tax rates are different from state to state because of possible credit reductions.
    Same goes for the FUTA tax base.
    Assuming the FUTA tax base is $7000, and that there is no credit reduction, the effective FUTA rate is 0.6%, and the FUTA tax the employer must pay is therefore 0.6%*7000=$42.

    Do check up on the State and FUTA rules for the last part of the answer.

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