Bruno Co which has a taxable payroll of 900000 is subject to

Bruno Co., which has a taxable payroll of $900,000, is subject to FUTA tax of 6.2%, which includes a state contribution rate of 5.4%. However, because of stable employment experience, the company’s state rate has been reduced to 2%. What is the total amount of federal and state unemployment tax for Bruno Co.?

Solution

FUTA Tax is 6.2% which includes state contribution of 5.4%, so Federal unemployment tax is 6.2-5.4 = 0.80%

If the company’s state rate has been reduced to 2% then the total amount of federal and state unemployment tax for Bruno Co. is 0.80 + 2 = 2.80% or $900000 * 2.80% = $25200