New FUTA rates effective July 1st

Posted on July 6, 2011

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Effective July 1st, 2011 the FUTA tax rate has been reduced by .2%. There has been a surtax of .2% in effect since the 1970’s and has been reinstated several times but the government did not extend it in June 2011 so it has expired.

What does this mean to employers: It means that the “net” rate for FUTA has dropped from .8% to .6% on the first $7,000 per employee per year. (There are exceptions in Michigan, Indiana, and South Carolina).

It does not affect any FUTA paid on wages prior to July 1, 2011. So if an employer has already paid wages on an employee that has earned $7,000 it will not have any effect until 2012. However on new hires or employees that have not been paid $7,000 year to date as of July 1st, the employer will begin paying the reduced rate as of July 1st.

 

 

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