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HR Support on Unemployment Taxes)

Editor's Note: Take steps to reduce your unemployment insurance tax rate.

Rena PirsosOverview:The Federal Unemployment Tax Act (FUTA), along with state unemployment insurance systems, pays unemployment insurance benefits to employees who lose their jobs through no fault of their own. While FUTA taxes are not withheld from employees' pay, most employers must pay FUTA taxes on a quarterly basis up to an annual wage base.

The base FUTA tax rate is 6% and the taxable wage base is $7,000. Most employers also must pay state unemployment insurance taxes, although at different annual wage bases and tax rates than under FUTA. A few states also require employees to contribute into the system. Employers can take steps to reduce their federal unemployment insurance tax rates.

Author: Rena Pirsos, JD, Legal Editor

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Compliance with federal (FUTA) and state unemployment insurance taxes and employer options for reducing their tax rates.