AIPB Mastering Payroll (National) Practice Exam 2025 – The All-in-One Resource to Achieve Payroll Certification Success!

Question: 1 / 400

What is the maximum FUTA tax rate?

5.4%

6.0%

The maximum FUTA (Federal Unemployment Tax Act) tax rate is indeed 6.0%. This tax is assessed on the first $7,000 of each employee's earnings, and employers are responsible for paying this tax. The purpose of the FUTA tax is to fund unemployment compensation for workers who have lost their jobs.

While states can offer credits on the FUTA taxes if they meet certain conditions, the basic federal rate stands at 6.0%. Most employers benefit from a credit that reduces their rate to as low as 5.4%, assuming they pay state unemployment taxes on time and in full. It's important to note that the full 6.0% rate is the upper limit when the credits can't be taken into account.

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7.0%

6.5%

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