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FUTA — Federal Unemployment Tax — is the one payroll tax that comes entirely out of your pocket, not your employees’. It funds federal unemployment programs and is filed once a year on Form 940. The math is straightforward: you pay 0.6% on the first 7,000eachemployeeearns(assumingyoupaidyourstateunemploymenttaxesontime).That′sabout7,000 each employee earns (assuming you paid your state unemployment taxes on time). That's about 42 per employee per year. Pluvel handles the deposits and filing automatically.

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What FUTA is

FUTA funds unemployment insurance at the federal level. It works alongside state unemployment (SUTA):
AspectFUTASUTA
Who paysEmployer onlyEmployer (usually)
Rate6.0% (0.6% after credit)Varies by state and employer
Wage baseFirst $7,000 per employeeVaries by state
Filed onForm 940State forms

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The FUTA credit

If you pay state unemployment taxes on time, you receive a credit against FUTA:
  • Standard credit: 5.4%
  • Net FUTA rate: 6.0% - 5.4% = 0.6%
This means you effectively pay 0.6% on the first 7,000peremployee=∗∗7,000 per employee = **42 per employee per year** maximum.
Some states have credit reduction due to federal unemployment loans. This increases your FUTA rate slightly. We track this and apply the correct rate.

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Filing schedule

Form 940 is filed annually:
For Tax YearDue Date
2025January 31, 2026
2026January 31, 2027
If you deposited all FUTA tax when due, you have until February 10 to file.

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FUTA deposits

FUTA deposits are made quarterly (not with each payroll):
QuarterPeriodDeposit Due
Q1January - MarchApril 30
Q2April - JuneJuly 31
Q3July - SeptemberOctober 31
Q4October - DecemberJanuary 31
You only need to deposit if your accumulated FUTA liability exceeds 500.Ifit′s500. If it's 500 or less, you can carry it to the next quarter.

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How deposits work

  1. After each payroll, we calculate FUTA on wages up to $7,000 per employee
  2. We accumulate the liability through the quarter
  3. If it exceeds $500, we deposit on time
  4. If under $500, it carries forward (deposited with the 940 or next quarter)

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How Pluvel handles 940

1

Track FUTA wages

We track each employee’s wages against the $7,000 FUTA wage base.
2

Make quarterly deposits

We deposit FUTA when your liability exceeds $500.
3

Apply state credits

We determine your credit based on state unemployment payments.
4

File Form 940

In January, we prepare and file your annual 940 return.

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Viewing your 940

Go to Payroll → Tax Filings → 940 to see:
  • Draft 940 — Current year (before filing)
  • Filed 940s — Historical returns
  • FUTA deposits — Quarterly deposit history

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Key lines on Form 940

LineDescription
Line 3Total payments to all employees
Line 4Payments exempt from FUTA
Line 5Total taxable FUTA wages
Line 7FUTA tax before adjustments (Line 5 × 0.006)
Line 9Credit reduction states adjustment
Line 12Total FUTA tax after adjustments
Line 13FUTA tax deposited
Line 14Balance due or overpayment

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Credit reduction states

When states borrow from the federal government to pay unemployment benefits and don’t repay on time, employers in that state lose part of their FUTA credit:

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How it works

  • Normal credit: 5.4% (net rate 0.6%)
  • If credit reduction applies: Credit reduced by 0.3% per year
  • You pay higher FUTA tax

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Checking your state

We monitor credit reduction states and apply the correct rate automatically. Affected states are listed on Form 940 Schedule A. Recent credit reduction states have included:
  • California (historically)
  • New York (historically)
  • Various states during economic downturns

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Common 940 situations

If you have employees in multiple states:
  1. FUTA applies to all employees regardless of state
  2. State unemployment credits vary by state
  3. We calculate blended credits based on wages in each state
  4. Schedule A lists your state breakdown
If this is your first year:
  1. You may not have paid enough SUTA to get full credit
  2. Your 940 may show additional FUTA due
  3. This balances out as your state payments normalize
Once an employee earns $7,000:
  1. No more FUTA accrues for them that year
  2. Most employees hit this in Q1 or Q2
  3. Your quarterly deposits decrease as more employees max out
If you deposited more than you owe:
  1. You can apply the overpayment to next year’s 940
  2. Or request a refund from the IRS
  3. We note the overpayment and track the credit

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Special considerations

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Exempt wages

Certain payments don’t count toward FUTA:
  • Family employees (under certain conditions)
  • Wages to H-2A visa workers
  • Retirement/pension payments
  • Group life insurance payments
We exclude exempt wages automatically based on your payroll setup.

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Closing a business

If you close your business during the year:
  1. File a final 940 covering the period you were open
  2. Check the “final return” box
  3. We help you with the closure process

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Accessing filed returns

To download a filed 940:
  1. Go to Payroll → Tax Filings
  2. Select the year
  3. Click Download PDF
The PDF includes Schedule A (for multi-state employers) if applicable.

State unemployment taxes

Learn about SUTA and state requirements.

Form 941

Quarterly federal tax return.