Question

A state charges a basic SUTA tax rate of 5.4 percent. Because of an excellent experience rating, an employer in the state has to pay only 1.0 percent of the taxable payroll as state tax. What is the percentage to be used in computing the credit against the federal unemployment tax?

Answer 1

The correct answer will be 5.4%

Notes

Tax rate for Federal unemployment tax is typically 6%. However, most employers are qualified to 5.4% as tax credit irrespective of the amount they have paid as state tax. Hence, percentage to be used in computing the credit against the federal unemployment tax will stand at 5.4%