2022 FUTA Tax Rate & Wage Base
The 2022 FUTA Tax Rate & Wage Base is $7,000.
Effective 2022-01-01Source: 2022 Instructions for Form 940 (IRS)Verified 2026-09-03
Compared with 2021
Every figure on this page is unchanged from 2021.
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Wage base | $7,000 | $7,000 | +$0 (+0.0%) |
Who it applies to
Employers who pay federal unemployment (FUTA) tax and file Form 940.
What changed this year, and why
The FUTA wage base for 2022 is $7,000 per employee.
Common questions
- What is the FUTA wage base?
- The FUTA wage base is the maximum amount of pay to each employee that is subject to FUTA tax in a calendar year. For 2022, only the first $7,000 paid to each employee (after subtracting any payments exempt from FUTA tax) is subject to the tax.
- What happens to wages above the FUTA wage base?
- Any wages paid to an employee above $7,000 in 2022 are not subject to FUTA tax. Employers report the excess on line 5 of Form 940.
The $1,500 quarter test and the 20 week test
An employer must file Form 940 for 2022 if it meets either of two tests during 2021 or 2022. The first test looks at wages: did the employer pay $1,500 or more to employees in any single calendar quarter? The second test looks at duration: did the employer have one or more employees for at least some part of a day in any 20 or more different weeks? When counting weeks for this second test, the employer counts all full-time, part-time, and temporary employees, but does not count partners if the business is a partnership. Meeting either test triggers the filing requirement; the employer does not need to meet both. If the business was sold or transferred during the year, each employer that answered "Yes" to at least one of these questions must file its own Form 940.
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 2021 or 2022? • Did you have one or more employees for at least some part of a day in any 20 or more different weeks in 2021 or 20 or more different weeks in 2022? Count all full-time, part-time, and temporary employees. However, if your business is a partnership, don't count its partners.
2022 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 2022 is 6.0% on the first $7,000 paid to each employee during the calendar year. Most employers receive a maximum credit of up to 5.4% against this tax for paying state unemployment taxes. The employer's net federal rate is the 6.0% rate minus the credit, leaving a small remaining percentage owed to the federal government. Every quarter, the employer must calculate how much of each employee's first $7,000 in annual wages was paid during that quarter to determine the quarterly tax liability. The credit is only available if the employer pays state unemployment taxes on time and in full. If an employer is in a credit reduction state, the credit may be reduced, resulting in a higher federal tax rate.
The FUTA tax is 6.0% (0.060) for 2022. Most employers receive a maximum credit of up to 5.4% (0.054) against this FUTA tax.
2022 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Why employers in some states pay more
Employers in credit reduction states must pay additional federal unemployment tax when filing Form 940. The U.S. Department of Labor determines which states have not repaid money borrowed from the federal government to pay unemployment benefits. For 2022, there are credit reduction states. If an employer paid any wages subject to the unemployment compensation laws of a credit reduction state, the credit against federal unemployment tax will be reduced based on the credit reduction rate for that state. Employers use Schedule A (Form 940) to figure the credit reduction. This means employers in these states may owe more than the standard reduced FUTA tax rate.
Credit reduction state. A state that hasn't repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state.” The U.S. 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. For 2022, there are credit reduction states.
2022 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Household employers are tested separately
Household employers are subject to a different filing threshold than other employers. A household employer must pay FUTA tax on wages paid to household employees only if the employer paid cash wages of $1,000 or more in any calendar quarter during 2021 or 2022. This threshold applies separately from the general filing tests that apply to business 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 file Schedule H (Form 1040) instead of Form 940 to report and pay FUTA tax. However, if the employer has other employees in addition to household employees, the employer may choose to include the household employees' FUTA taxes on Form 940 rather than filing Schedule H separately.
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 2021 or 2022.
2022 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 full calendar year, employers may need to deposit FUTA tax before filing the return. If the total FUTA tax for the calendar year is more than $500, the employer must make at least one quarterly deposit. The timing of deposits depends on the quarterly tax liability. If the tax for a quarter is $500 or less, the employer carries it forward to the next quarter. This carryover continues until the cumulative undeposited tax exceeds $500. At that point, the employer must deposit the accumulated tax by the last day of the month following the end of that quarter. If the employer always owes $500 or less each quarter, no deposits are required during the year; the full amount is simply paid when the return is filed.
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.
2022 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Deposits have to be electronic, not mailed
Employers paying FUTA tax are required to make all federal tax deposits through the Electronic Federal Tax Payment System (EFTPS). Paper checks or mailed deposits are not accepted. If an employer does not wish to use EFTPS directly, they may authorize a tax professional, financial institution, payroll service, or another trusted third party to make electronic deposits on their behalf. Alternatively, an employer can work with its financial institution to initiate a same-day wire payment. The requirement to use electronic funds transfer applies uniformly to all FUTA tax deposits, regardless of the amount owed. EFTPS is a free service run by the Department of the Treasury specifically for this purpose.
You must use EFT to make all federal tax deposits. Generally, an EFT is made using EFTPS. If you don't want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf.
2022 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
An overpayment is not lost: refund it or apply it forward
When an employer deposits more FUTA tax than is actually owed for the year, the overpayment is not forfeited. The employer may choose to have the IRS either apply the overpayment as a credit toward the following year's return or issue a refund. This choice is indicated on line 15 of Form 940 by checking the appropriate box; only one box may be selected. If neither box is checked, or if both are checked, the IRS will generally apply the overpayment to the next return by default. Even if a box is checked, the IRS retains the authority to apply the overpayment against any past-due tax account associated with the employer's EIN. If the overpayment is less than $1, the IRS will only issue a refund or apply it forward if the employer requests it in writing.
If you deposited more than the FUTA tax due for the year, you may choose to have us either: • Apply the refund to your next return, or • Send you a refund. Check the appropriate box on line 15 to tell us which option you select. Check only one box on line 15. If you don’t check either box or if you check both boxes, we will generally apply the overpayment to your next return. Regardless of any box you check or don’t check, we may apply your overpayment to any past due tax account that is shown in our records under your EIN. If line 15 is less than $1, we will send you a refund or apply it to your next return only if you ask for it in writing.
2022 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Filing with the wrong EIN can cost you penalties, not just a processing delay
The EIN on Form 940 must exactly match the EIN that the IRS assigned to the employer's business. Using an incorrect EIN - or using the EIN that belongs to another business - may result in both penalties and delays in processing the return. Employers must not substitute a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) on forms that require an EIN. A return filed without a valid EIN will not be accepted, which may also trigger penalties. Because the FUTA wage base is $7,000 for 2022, any error in identifying the employer can affect the calculation and reporting of tax on that base, compounding the processing and penalty consequences.
Filing a Form 940 with an incorrect EIN or using the EIN of another's business may result in penalties and delays in processing your return.
2022 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.
2022 Instructions for Form 940 (IRS)
- Wage base
Only the first $7,000 you paid to each employee in a calendar year, after subtracting any payments exempt from FUTA tax, is subject to FUTA tax. This $7,000 is called the FUTA wage base.