2019 FUTA Wage Base
The 2019 FUTA Wage Base is $7,000.
Effective 2019-01-01Source: 2019 Instructions for Form 940 (IRS)Verified 2026-08-29
Compared with 2018
Every figure on this page is unchanged from 2018.
| Item | 2018 | 2019 | Change |
|---|---|---|---|
| Wage base | $7,000 | $7,000 | +$0 (+0.0%) |
Who it applies to
Employers who pay wages subject to federal unemployment tax and file IRS Form 940
What changed this year, and why
The FUTA wage base for 2019 is $7,000 per employee. This is the amount of wages subject to the Federal Unemployment Tax Act tax for each employee during the calendar year. The wage base remained at $7,000, unchanged from 2018.
Common questions
- What is the FUTA wage base for 2019?
- For 2019, the FUTA wage base is $7,000 per employee. FUTA tax applies to the first $7,000 paid to each employee during the calendar year, after subtracting any payments exempt from FUTA tax. The wage base was also $7,000 in 2018.
The $1,500 quarter test and the 20 week test
For 2019, most employers must file Form 940 if they meet either of two tests. The first test asks whether you paid wages of $1,500 or more to employees in any calendar quarter during 2018 or 2019. The second test asks whether you had one or more employees for at least some part of a day in any 20 or more different weeks in 2018 or 2019. When counting weeks for the second test, you must count all full-time, part-time, and temporary employees. However, if your business is a partnership, don't count its partners. If you answer "Yes" to either question, you must file Form 940. The FUTA tax applies to the first $7,000 you pay to each employee during the calendar year after subtracting any payments exempt from FUTA tax. Even if you only meet one of these tests, you are required to file and potentially pay FUTA tax on wages up to the wage base.
Except as noted below, if you answer “Yes” to either one of these questions, you must file Form 940. • Did you pay wages of $1,500 or more to employees in any calendar quarter during 2018 or 2019? • Did you have one or more employees for at least some part of a day in any 20 or more different weeks in 2018 or 20 or more different weeks in 2019? Count all full-time, part-time, and temporary employees. However, if your business is a partnership, don't count its partners.
2019 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
The rate charged on the wage base, and the state credit against it
The FUTA tax rate for 2019 is 6.0% applied to the first $7,000 you pay to each employee during the calendar year. This $7,000 is the wage base, and it applies per employee, not per employer. However, most employers receive a maximum credit of up to 5.4% against this FUTA tax for paying state unemployment taxes. When an employer receives the full credit, the effective FUTA tax rate drops significantly, because the credit offsets almost all of the 6.0% rate. The credit is available only if the employer paid all required state unemployment tax by the due date. Every quarter, employers must calculate how much of the first $7,000 of each employee's annual wages they paid during that quarter to determine their quarterly FUTA tax liability. After applying the maximum credit, employers multiply the taxable wages by a reduced rate to determine the amount owed to the federal government.
You owe FUTA tax on the first $7,000 you pay to each employee during the calendar year after subtracting any payments exempt from FUTA tax. The FUTA tax is 6.0% (0.060) for 2019. Most employers receive a maximum credit of up to 5.4% (0.054) against this FUTA tax.
2019 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Why employers in some states pay more
A credit reduction state is a state that has not repaid money it borrowed from the federal government to pay unemployment benefits. The Department of Labor determines which states are credit reduction states. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940. For 2019, the U.S. Virgin Islands (USVI) is the only credit reduction state. If you paid any wages that are subject to the unemployment compensation laws of the USVI, your credit against federal unemployment tax will be reduced based on the credit reduction rate for the USVI. You must use Schedule A (Form 940) to figure the credit reduction. This means employers in credit reduction states owe more than the normal FUTA tax because they cannot claim the full state credit that would otherwise offset most of their federal liability.
A state that hasn't repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state.” The Department of Labor determines these states. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940.
2019 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Household employers are tested separately
Household employers are tested under a different threshold than regular employers. If you are a household employer, you must pay FUTA tax on wages that you paid to your household employees only if you paid cash wages of $1,000 or more in any calendar quarter in 2018 or 2019. This threshold is lower than the general test that applies to other employers. A household employee performs household work in a private home, a local college club, or a local chapter of a college fraternity or sorority. Generally, employers of household employees must file a schedule with their individual income tax return instead of Form 940. However, if you have other employees in addition to household employees, you may need to file Form 940 for those other employees. The wage base of $7,000 still applies to household employees just as it does to other employees.
If you’re a household employer, you must pay FUTA tax on wages that you paid to your household employees only if you paid cash wages of $1,000 or more in any calendar quarter in 2018 or 2019.
2019 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
The $500 rule that decides when you deposit
Although Form 940 covers a calendar year, you may have to deposit your FUTA tax before you file your return. If your FUTA tax is more than $500 for the calendar year, you must deposit at least one quarterly payment. You must determine when to deposit your tax based on the amount of your quarterly tax liability. If your FUTA tax is $500 or less in a quarter, carry it over to the next quarter. Continue carrying your tax liability over until your cumulative tax is more than $500. At that point, you must deposit your tax for the quarter. Deposit your FUTA tax by the last day of the month after the end of the quarter. If your tax for the next quarter is $500 or less, you are not required to deposit your tax again until the cumulative amount is more than $500. For fourth quarter liabilities, if your FUTA tax plus any undeposited amounts from earlier quarters is more than $500, deposit the entire amount by January 31, 2020.
If your FUTA tax is more than $500 for the calendar year, you must deposit at least one quarterly payment.
2019 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2019 Instructions for Form 940 (IRS)
- Wage base
This $7,000 is called the FUTA wage base.