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The Mandate Monitor

Federal unemployment tax (FUTA)

Checked November 8, 2026Source: Internal Revenue Service

Short answer

Employers pay federal unemployment tax (FUTA) of 6.0% on the first $7,000 of each employee’s wages a year, and most receive a credit of up to 5.4% for paying state unemployment tax on time, leaving 0.6%, or $42 per employee. Employers in states that have not repaid federal unemployment loans get a smaller credit: for 2025 those were California (1.2%) and the U.S. Virgin Islands (4.5%), and the U.S. Department of Labor’s potential list for 2026, not final until after the November 10, 2026 repayment deadline, shows California (a potential 5.3%, made up of 1.5% plus an estimated 3.8% add-on that can be waived and replaced with a different add-on) and the U.S. Virgin Islands (a potential 4.8%). Form 940 for 2026 is due to the IRS by February 1, 2027, or February 10 for employers that deposited all their FUTA tax on time.

Next date: February 1, 2027: Form 940 for 2026 due to the IRS, along with any fourth-quarter federal unemployment tax (FUTA) deposit over $500 and any credit reduction amount.

The numbers by year

YearRateEmployeeEmployerWage capNote
20266%0%6%$7,000Employer-only tax. Most employers get a credit of up to 5.4% for state unemployment tax paid in full and on time, for a net rate of 0.6% ($42 per employee). Employers in credit reduction states pay more. Potential 2026 credit reductions from the U.S. Department of Labor, final only after November 10, 2026: California 5.3% (1.5% plus an estimated 3.8% add-on that can be waived and replaced with a different add-on) and the U.S. Virgin Islands 4.8%.
20256%0%6%$7,000Net 0.6% after the full 5.4% credit. Credit reduction states for 2025: California (1.2%, making the net rate 1.8%) and the U.S. Virgin Islands (4.5%, net 5.1%).

Dates

  1. · Federal

    Form 940 for 2026 due to the IRS, along with any fourth-quarter federal unemployment tax (FUTA) deposit over $500 and any credit reduction amount

    January 31, 2027 is a Sunday, so both move to Monday, February 1.

  2. · Federal

    Form 940 for 2026 due for employers that deposited all their 2026 federal unemployment tax (FUTA) when it was due

Earlier dates (2)
  • November 10, 2026: Repayment deadline for states with outstanding federal unemployment loans. Employers in states with an outstanding federal loan balance on January 1 of two or more consecutive years, unpaid before this date, face a 2026 federal unemployment tax (FUTA) credit reduction, which the U.S. Department of Labor determines after this date.
  • February 2, 2026: Form 940 for 2025 was due. Employers that deposited all 2025 federal unemployment tax (FUTA) on time had until February 10, 2026.

What employers have to do

  1. Pay your state unemployment tax in full by the Form 940 due date. The full 5.4% credit depends on it, and wages that are exempt from state unemployment tax (corporate officers in some states, for example) can be taxed at the full 6.0%.
  2. Figure federal unemployment tax (FUTA) each quarter on the first $7,000 of each employee’s wages for the year. When the amount you owe, carried forward from earlier quarters, passes $500, deposit it electronically by the last day of the month after the quarter ends.
  3. If you paid wages in more than one state, or in a credit reduction state, file Schedule A (Form 940) and include any credit reduction amount with your fourth-quarter deposit.
  4. File Form 940 for 2026 by February 1, 2027, or by February 10, 2027 if every deposit was on time.
  5. Do not withhold federal unemployment tax (FUTA) from employees’ wages.

Questions employers ask

Who has to follow this?

Employers that paid wages of $1,500 or more in any calendar quarter, or had at least one employee for some part of a day in 20 or more different weeks, in the current or prior year. Household and farm employers have separate tests. State and local government employers are exempt. Only employers pay the tax; it is never deducted from employees’ pay.

All federal employer rules · Deadline calendar

Sources

  1. 26 U.S.C. § 3301
  2. Topic no. 759, Form 940 filing and deposit requirements (rate, $7,000 wage base, 5.4% credit, January 31 and February 10 due dates, next-business-day rule), Internal Revenue Service (read Nov 8, 2026)
  3. Instructions for Form 940 (2025): who must file, deposit rules, 2025 due dates, Internal Revenue Service (read Nov 8, 2026)
  4. Schedule A (Form 940) for 2025: credit reduction states for 2025, Internal Revenue Service (read Nov 8, 2026)
  5. FUTA Credit Reductions (Employment and Training Administration): November 10 repayment rule; 2026 list potential until then, U.S. Department of Labor (read Nov 8, 2026)
  6. Potential 2026 FUTA Credit Reductions (spreadsheet): California 1.5% plus estimated 3.8% add-on, 5.3% potential total; U.S. Virgin Islands 4.8%; not final until after November 10, 2026, U.S. Department of Labor, Employment and Training Administration (read Nov 8, 2026)