How is FUTA calculated?

FUTA, or the Federal Unemployment Tax Act tax, is calculated based on a percentage of the first $7,000 of each employee's wages. The standard FUTA tax rate is 6.0%, but employers can receive a credit of up to 5.4% for state unemployment taxes paid, effectively reducing the rate to 0.6%. Employers are responsible for paying this tax, which funds unemployment benefits at the federal level. It's important to note that FUTA is not withheld from employee wages.