Federal Unemployment Tax (FUTA) — Payroll Definition

Federal Unemployment Tax (FUTA) paystub meaning: A 6.0% federal tax on the first $7,000 of wages per employee — paid entirely by the employer.

A 6.0% federal tax on the first $7,000 of wages per employee — paid entirely by the employer.

FUTA (Federal Unemployment Tax Act) is a 6.0% tax on the first $7,000 of each employee's wages per year, paid entirely by the employer. With the standard SUTA credit, the effective FUTA rate is 0.6% in most states. This means FUTA costs an employer a maximum of $42 per employee per year ($7,000 × 0.6%). You will NOT see FUTA on your employee paystub — it is an employer-only expense.

Tax entries on a pay statement depend on taxable wages, current employee elections, filing status, pay frequency, jurisdiction, and current agency instructions. Compare the current-period amount with year-to-date totals and the employer-issued record before treating it as final.

When this term appears on a statement, read its label, current amount, year-to-date amount, pay-period context, and any adjacent rate or hours together. Resolve a mismatch with the original issuer or the cited authority rather than changing a record to force a preferred result.