What is the Federal Unemployment Tax rate?

The Federal Unemployment Tax (FUTA) rate is set at 6.0%. However, employers can receive a credit of up to 5.4% if they pay their state unemployment taxes in full and on time, effectively reducing the FUTA tax rate to 0.6%. The basic federal tax rate has historically been around 6%, making it the foundational rate used for calculation purposes.

Understanding this structure is essential for employers as it impacts their payroll tax responsibilities. While various state unemployment tax rates apply and can influence the overall taxation structure, the federal component is critical in determining how much employers must budget for federal obligations.

In the context of the provided options, the choice noted may have caused confusion regarding the actual rate versus credit consideration, but the key takeaway is that the standard tax rate used in federal unemployment calculations is indeed 6.0%, known as the FUTA tax rate.