The Federal Unemployment Tax Act rate was last changed on July 1, 2011, when a temporary 0.2% surtax expired and the gross FUTA rate dropped from 6.2% to 6.0%. For most employers, that brought the net rate down from 0.8% to 0.6% of the first $7,000 in wages paid to each employee. Nothing about the federal rate structure has changed since.1Center for Agricultural Law and Taxation, Iowa State University. FUTA Surtax Expires
What the FUTA Rate Is Today
The gross FUTA rate is 6.0% on the first $7,000 of wages paid to each employee per calendar year.2IRS. Topic No. 759, Form 940 – Employer’s Annual Federal Unemployment (FUTA) Tax Return Employers who pay their state unemployment taxes on time and in full receive a credit of up to 5.4% against that rate. That leaves a net federal tax of 0.6%, or a maximum of $42 per employee per year.3U.S. Department of Labor. UI Tax Topic Page
The 5.4% credit is reduced for employers in states that have borrowed from the federal government to pay unemployment benefits and have not repaid those loans. In those credit reduction states, the effective rate is higher than 0.6%. For the 2025 tax year, California carried a 1.2% credit reduction and the U.S. Virgin Islands a 4.5% reduction.4Federal Register. Notice of the FUTA Credit Reductions Applicable for 2025
What Happened in 2011
The 0.2% surtax that expired in 2011 had been in place since January 1, 1977. It was added by the Unemployment Compensation Amendments of 1976 to help repay general Treasury funds used for unemployment benefits during the 1973–75 recession.5Social Security Administration. The Unemployment Compensation Amendments of 1976 The debt was repaid by 1987, but Congress extended the surtax eight more times over the following 24 years.6Tax Notes. Camp Announces Expiration of FUTA Tax
The ninth extension did not happen. House Republicans declined to authorize it, and the surtax lapsed on July 1, 2011. President Obama’s fiscal year 2012 budget had proposed making it permanent, but that proposal did not advance.1Center for Agricultural Law and Taxation, Iowa State University. FUTA Surtax Expires6Tax Notes. Camp Announces Expiration of FUTA Tax
The Last Permanent Change: TEFRA in 1982
If you set the surtax aside and ask when Congress last permanently rewrote the FUTA rate, the answer is the Tax Equity and Fiscal Responsibility Act of 1982 (P.L. 97-248). TEFRA raised the net federal rate to 0.6%, set the gross rate at 6.2% and the maximum credit at 5.4% effective January 1, 1985, and raised the taxable wage base to $7,000 effective in 1983.7U.S. Department of Labor. Chronology of Federal Unemployment Compensation Laws8U.S. Department of Labor. UIPL No. 04-83
Every component TEFRA set is still in force. The 6.0% gross rate (after the surtax expired), the 5.4% credit, and the $7,000 wage base have all held for more than four decades. Congress had permanently raised the net rate twice before TEFRA — from 0.3% to 0.4% under the Social Security Amendments of 1960, then to 0.5% under the Employment Security Amendments of 1970 — and has not touched it since.9Congressional Research Service. The Federal Unemployment Tax Act (FUTA): Overview and Issues
Why the Effective Tax Keeps Shrinking
The $7,000 wage base is not indexed to inflation or wage growth. Because wages have risen while the base has not, the real value of FUTA revenue has eroded by roughly 70% since 1983, according to policy analyses.10Niskanen Center. Broaden the Base, Lower the Improper Payment Rates States set their own unemployment insurance wage bases separately and most sit well above the federal floor, commonly in the $10,000 to $50,000 range.11EY. 2026 State Unemployment Insurance Taxable Wage Bases
What Could Change Next
As of 2026, no legislation has been enacted to change the FUTA rate or wage base. Policy researchers have modeled options ranging from a modest wage base increase to $8,000 with inflation indexing (projected to raise an additional $11 billion over ten years) to a larger increase to $14,000 with wage-growth indexing (projected to raise an additional $59 billion).10Niskanen Center. Broaden the Base, Lower the Improper Payment Rates The 119th Congress has seen at least one relevant bill introduced, the Unemployment Insurance Modernization and Recession Readiness Act (H.R. 4439), though its specific provisions and status are not fully detailed in available records.12U.S. Congress. H.R. 4439 – Unemployment Insurance Modernization and Recession Readiness Act Under current law, FUTA is projected to generate $64 billion over the 2026–2035 period at the 0.6% net rate on $7,000 in wages.
For now, plan on 6.0% gross, 0.6% net, and $7,000 per employee, with an eye on the annual credit reduction list if you employ workers in a state that owes the federal unemployment trust fund.