The statute
26 U.S.C. 3301 imposes a 6.0% federal unemployment (FUTA) tax on employers. Nothing is withheld from employees; the contractor pays it alone. The tax falls on "wages" as defined in 26 U.S.C. 3306, which counts only the first $7,000 of each employee's wages per calendar year.
Traps:
- Reading "total wages" in section 3301 as all wages paid ignores the $7,000 limit in the definition. That is a listed common error.
- 6.2% is the old FUTA rate that ended in mid-2011. Do not use it.
- $184,500 is the social security wage base, not the FUTA base.
The state credit and the 0.6% net rate
26 U.S.C. 3302 lets the employer credit contributions to a certified state unemployment fund, such as Georgia's, against FUTA. Under 3302(c)(1) the total credit may not exceed 90% of the tax. Ninety percent of 6.0% is a 5.4% maximum credit, so an employer that pays its state contributions on time and gets the full credit owes:
- Net FUTA rate: 6.0% − 5.4% = 0.6%
Keep the numbers straight: 5.4% is the credit, not the tax owed; 6.0% is the gross rate before credit; 0.8% comes from subtracting 5.4% from the outdated 6.2%. The cap is 90%, not 100% (which would wipe out the federal tax) and not 54% (a misreading of the 5.4% rate). The 10% is what remains after the maximum credit, not the cap.
Working a FUTA problem
Always cap each employee at $7,000 first, then apply the rate. Example from IRS Publication 15 (2026): 10 employees, each paid $30,000, maximum credit.
- FUTA wages: 10 × 7,000 = 70,000
- Net FUTA: 70,000 × 0.006 = $420
The wrong paths: 0.6% on all $300,000 of wages gives $1,800 (ignores the base); 6.0% on $70,000 gives $4,200 (ignores the credit); 70,000 × 0.054 = $3,780 is the credit itself, not the tax.