0.2% FUTA Surcharge Expires June 30, 2011

After 35 years, the House of Representatives have allowed the 0.2% Federal Unemployment Tax Act (FUTA) "temporary" Surcharge to expire.

FUTA is assessed on the first $7,000 of each employee’s annual compensation. The FUTA rate was 6.2%. Employers who paid their state unemployment tax on time received a 5.4% credit effectively reducing their Federal tax to 0.8%.

Effective July 1, 2011 the FUTA rate will be 6.0%. The state credit remains at 5.4%, therefore, the effective rate is 0.6%. The maximum FUTA tax per employee will now be $42 down from $56.