What is the 2024 FUTA tax rate and wage base for federal unemployment tax?
Correct Answer
C) 0.6% on first $7,000 of wages
The FUTA tax rate is 0.6% (after credit reduction) on the first $7,000 of each employee's wages per year. This is the standard rate for employers who pay state unemployment taxes.
Why This Is the Correct Answer
The Federal Unemployment Tax Act (FUTA) tax rate for 2024 is 0.6% on the first $7,000 of each employee's wages per year. This rate applies to employers who pay their state unemployment taxes on time and in full, allowing them to receive the maximum credit reduction from the gross FUTA rate of 6.0%. The wage base of $7,000 has remained unchanged for many years and is a key figure contractors must know for payroll calculations.
Why the Other Options Are Wrong
Option B: 1.0% on first $10,000 of wages
The tax rate of 0.6% is correct, but the wage base of $9,000 is incorrect. The FUTA wage base has been $7,000 for many years and remains at this level for 2024.
Option D: 0.8% on first $7,000 of wages
This option incorrectly states both the rate and wage base. The FUTA rate is not 1.0% and the wage base is not $10,000. The 1.0% rate might be confused with some state unemployment rates, but federal FUTA is lower at 0.6%.
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