FUTA Tax Rate Change Effective July 1, 2011
The effective tax rate for the Federal Employment Taxes (“FUTA”) was reduced from .8% (.008) to .6% (.006) on July 1, 2011. Congress has announced that the FUTA .2% surcharge, first enacted in 1977, will not be extended after June 30, 2011. Employers have been required to pay a flat rate of .8% on the first $7,000.00 of each employee’s annual wages for FUTA.
The IRS is currently revising Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) to accommodate the two different FUTA rates for calendar year 2011.