What is it?

The FUTA2 Credit Reduction What is it? For-profit employers pay federal (FUTA) and state
unemployment insurance (UI) taxes on wages paid. The FUTA tax rate is 6.0%, but employers
receive an offsetting credit of 5.4% for payment of state UI taxes. This makes the effective
FUTA tax rate 0.6 %, which applies to wages paid.

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