2024 FUTA Tax Rate & Wage Base
The 2024 FUTA Tax Rate & Wage Base is $7,000.
Effective 2024-01-01Source: 2024 Instructions for Form 940 (IRS)Verified 2026-09-02
Compared with 2023
Every figure on this page is unchanged from 2023.
| Item | 2023 | 2024 | Change |
|---|---|---|---|
| Wage base | $7,000 | $7,000 | +$0 (+0.0%) |
Who it applies to
Employers who pay wages subject to the Federal Unemployment Tax Act (FUTA) tax and file Form 940.
What changed this year, and why
The 2024 FUTA wage base is $7,000 per employee.
Common questions
- What does the FUTA wage base mean?
- The FUTA wage base is the maximum amount of wages paid to each employee in a calendar year that is subject to FUTA tax. For 2024, the FUTA wage base is $7,000. Employers pay FUTA tax only on the first $7,000 of wages paid to each employee during the year, after subtracting any payments exempt from FUTA tax. Wages paid above this amount are not subject to FUTA tax.
Every amount on this page is a published figure rather than yours. The FUTA wage base headroom takes the number you enter and works it out against them, showing which published figure it used.
The $1,500 quarter test and the 20 week test
An employer must file Form 940 for 2024 if it meets either of two tests. The first is the $1,500 quarter test: the employer paid wages of $1,500 or more to employees in any single calendar quarter during 2023 or 2024. The second is the 20-week test: the employer had one or more employees for at least some part of a day in 20 or more different weeks during 2023 or 2024. All full-time, part-time, and temporary employees count toward the week total, though partners in a partnership are excluded. Answering yes to either one of these questions triggers the filing requirement. The $1,500 wage threshold and the 20-week threshold are measured separately, so an employer can cross one without crossing the other and still be required to file.
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 2023 or 2024? • Did you have one or more employees for at least some part of a day in any 20 or more different weeks in 2023 or 20 or more different weeks in 2024?
2024 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
For 2024, the FUTA tax rate is 6.0% (0.060) applied to the first $7,000 paid to each employee during the calendar year. Most employers receive a maximum credit of up to 5.4% (0.054) against this FUTA tax. This credit is available to employers who pay their state unemployment taxes in full and on time. The credit offsets nearly all of the federal rate, leaving a small net amount that the employer owes. Each quarter, the employer must calculate how much of the first $7,000 of each employee's annual wages was paid during that quarter to determine the quarterly tax liability. If an employer does not qualify for the full credit, the effective rate will be higher than the net amount after credit.
The FUTA tax is 6.0% (0.060) for 2024. Most employers receive a maximum credit of up to 5.4% (0.054) against this FUTA tax.
2024 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 one that has not repaid money it borrowed from the federal government to pay unemployment benefits. The U.S. Department of Labor determines which states fall into this category. When an employer pays wages subject to the unemployment tax laws of such a state, the employer must pay additional federal unemployment tax when filing Form 940. For 2024, there are credit reduction states in effect. Employers who paid wages subject to the unemployment compensation laws of a credit reduction state will see their credit against federal unemployment tax reduced based on the credit reduction rate applicable to that state. The credit reduction is calculated using Schedule A (Form 940). This means the employer owes more than the standard net FUTA tax because the state credit they can claim is smaller than usual.
A state that hasn't repaid money it borrowed from the federal government to pay unemployment benefits is called 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.
2024 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Household employers are tested separately
Household employers are subject to a separate threshold for FUTA tax. 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 in 2023 or 2024. This threshold is lower than the general wage test that applies to most 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 Schedule H (Form 1040) instead of Form 940. However, if the employer has other employees in addition to household employees, the employer can choose to include the FUTA taxes for household employees on Form 940 rather than filing a separate Schedule H.
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 2023 or 2024.
2024 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, employers may have to deposit their FUTA tax before filing the return. The key threshold is $500: if the employer's FUTA tax is more than $500 for the calendar year, at least one quarterly deposit is required. The timing of each deposit depends on quarterly tax liability. If the FUTA tax for a quarter is $500 or less, the amount is carried over to the next quarter rather than deposited immediately. The employer continues carrying the liability forward until the cumulative total exceeds $500. Once that happens, the employer must deposit the tax by the last day of the month after the end of that quarter. If the next quarter's tax is $500 or less, no additional deposit is required until the cumulative amount again surpasses $500.
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.
2024 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
Deposits have to be electronic, not mailed
All federal tax deposits for FUTA must be made electronically using the Electronic Federal Tax Payment System (EFTPS). Taxpayers cannot mail paper checks or money orders to pay their FUTA tax. If a taxpayer does not wish to use EFTPS directly, they may arrange for a tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on their behalf. Alternatively, a taxpayer may arrange for their financial institution to initiate a same-day wire payment. EFTPS itself is a free service provided by the Department of the Treasury. This electronic deposit requirement applies to every FUTA deposit, regardless of the amount, ensuring that all payments are processed quickly and securely.
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. EFTPS is a free service provided by the Department of the Treasury.
2024 Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (IRS)
An overpayment is not lost: refund it or apply it forward
If you deposit more FUTA tax than you owe for the year, the overpayment is not forfeited. You may choose to have the IRS either apply the amount as a credit to your next year's return or send you a refund. You indicate your preference by checking the appropriate box on line 15 of Form 940, but you must check only one box. If you leave both boxes unchecked or check both, the IRS will generally apply the overpayment to your next return by default. In addition, regardless of which box you check, the IRS may apply your overpayment to any past-due tax account it finds in its records under your EIN. If the overpayment is very small, the IRS will only issue a refund or apply it forward if you request 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.
2024 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 Employer Identification Number (EIN) on your Form 940 must exactly match the EIN the IRS assigned to your business. Using a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) in place of an EIN, or filing with an incorrect EIN, will cause the return to be rejected and can trigger penalties. Worse, using the EIN that belongs to another business may result in additional penalties and delays in processing your return. Because the EIN is the primary identifier the IRS uses to match deposits to your account, an error can cause your payments to be credited to the wrong taxpayer, creating compliance problems that are difficult to untangle. Always verify that the EIN on your return matches the IRS records before filing.
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.
2024 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.
2024 Instructions for Form 940 (IRS)
- Wage base
This $7,000 is called the FUTA wage base.