Federal Unemployment Tax Act
Source: https://www.edd.ca.gov/en/payroll_taxes/federal-unemployment-tax-act
Archived: 2026-04-23 17:12
Federal Unemployment Tax Act
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Federal Unemployment Tax Act
For Wages Employers Paid in 2025
California employers fund regular Unemployment Insurance (UI) benefits through contributions to the state’s UI Trust Fund on behalf of each employee. Tax-rated employers pay a percentage on the first $7,000 in subject wages paid to each employee in a calendar year. The UI rate schedule and amount of taxable wages are determined annually. New employers pay 3.4 percent (.034) for a period of two to three years. We notify employers of their new rate each December. The maximum tax is $434 per employee per year (calculated at the highest UI tax rate of 6.2 percent x $7,000.)
Employers also pay Federal Unemployment Tax Act (FUTA) taxes to the federal government to help pay for:
Administration of the UI program.
UI loans to insolvent states.
Federal extension benefits.
Tax Information
California has an outstanding federal loan balance, which means employers will have to pay a higher FUTA tax. California began borrowing money from the federal government on June 3, 2020, because of the COVID-19 crisis. As mentioned in the
January 2026 UI Fund Forecast
, California’s loan balance is expected to be about $21.3 billion by the end of 2027.
Normally, federal law provides employers with a 5.4 percent tax credit toward the 6.0 percent regular tax when they file their federal Employer’s Annual Federal Unemployment (FUTA) Tax Return (Form 940). However, this credit will be reduced by 1.2 percent to a 4.2 percent credit for the 2025 tax year. This means California employers will pay an extra $84 per employee for the 2025 tax year. FUTA costs are expected to keep going up until the outstanding loan is paid off and the credit will be reduced by an additional 0.3 percent each year. For more information, visit
FUTA Credit Reduction
on the IRS website.
FUTA Recertification
Each year, the EDD and the IRS compare the amounts you reported on your IRS Form 940 to the Total Subject Wages (Line C) and UI Taxable Wages (Line D2) reported on your EDD
Quarterly Contribution Return and Report of Wages
(DE 9). If the amounts are not the same, you have what is referred to as an out-of-balance condition and may get a notice from the IRS or the EDD.
An out-of-balance condition can happen when the EDD is not notified of a change in your organization or Federal Employer Identification Number (FEIN). You can update your FEIN and make changes to your account online using
e-Services for Business
.
The IRS uses the FUTA recertification process to make sure the total taxable wages you claimed on the
Employer’s Annual Federal Unemployment (FUTA) Tax Return
(Form 940) or the federal
Household Employment Taxes
(Form 1040, Schedule H) were paid to the state. You must meet both the state and federal payroll tax requirements.
To request a FUTA recertification online:
Go to
Ask EDD
.
Select the
Payroll Tax
category.
Select the
FUTA Recertification
sub-category.
Select the
FUTA Recertification
topic.
Select
Continue
and complete the necessary information.
If you have questions about your request, call our FUTA Recertification Unit at 1-916-654-8545.
e-Services for Business
Use e-Services for Business to manage your employer payroll tax account online.
Log In
Enroll
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Required Filings and Due Dates
Find
Payroll Tax Webinars
Visit
Employer News and Updates
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EDD email notices
Get
Forms and Publications
Contact Us
If you have questions,
Contact Payroll Taxes
. You can also contact the Taxpayer Assistance Center at 1-888-745-3886 or visit your local
Employment Tax Office
.
Additional Resources
Correct Filed Reports, Returns, or Deposits
California Employer’s Guide
(DE 44) (PDF)
Frequently Asked Questions
Determine Taxable Wages and Calculate Taxes Due
Household Employer's Guide
(DE 8829) (PDF)
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Skip to Main Content
Español
Federal Unemployment Tax Act
For Wages Employers Paid in 2025
California employers fund regular Unemployment Insurance (UI) benefits through contributions to the state’s UI Trust Fund on behalf of each employee. Tax-rated employers pay a percentage on the first $7,000 in subject wages paid to each employee in a calendar year. The UI rate schedule and amount of taxable wages are determined annually. New employers pay 3.4 percent (.034) for a period of two to three years. We notify employers of their new rate each December. The maximum tax is $434 per employee per year (calculated at the highest UI tax rate of 6.2 percent x $7,000.)
Employers also pay Federal Unemployment Tax Act (FUTA) taxes to the federal government to help pay for:
Administration of the UI program.
UI loans to insolvent states.
Federal extension benefits.
Tax Information
California has an outstanding federal loan balance, which means employers will have to pay a higher FUTA tax. California began borrowing money from the federal government on June 3, 2020, because of the COVID-19 crisis. As mentioned in the
January 2026 UI Fund Forecast
, California’s loan balance is expected to be about $21.3 billion by the end of 2027.
Normally, federal law provides employers with a 5.4 percent tax credit toward the 6.0 percent regular tax when they file their federal Employer’s Annual Federal Unemployment (FUTA) Tax Return (Form 940). However, this credit will be reduced by 1.2 percent to a 4.2 percent credit for the 2025 tax year. This means California employers will pay an extra $84 per employee for the 2025 tax year. FUTA costs are expected to keep going up until the outstanding loan is paid off and the credit will be reduced by an additional 0.3 percent each year. For more information, visit
FUTA Credit Reduction
on the IRS website.
FUTA Recertification
Each year, the EDD and the IRS compare the amounts you reported on your IRS Form 940 to the Total Subject Wages (Line C) and UI Taxable Wages (Line D2) reported on your EDD
Quarterly Contribution Return and Report of Wages
(DE 9). If the amounts are not the same, you have what is referred to as an out-of-balance condition and may get a notice from the IRS or the EDD.
An out-of-balance condition can happen when the EDD is not notified of a change in your organization or Federal Employer Identification Number (FEIN). You can update your FEIN and make changes to your account online using
e-Services for Business
.
The IRS uses the FUTA recertification process to make sure the total taxable wages you claimed on the
Employer’s Annual Federal Unemployment (FUTA) Tax Return
(Form 940) or the federal
Household Employment Taxes
(Form 1040, Schedule H) were paid to the state. You must meet both the state and federal payroll tax requirements.
To request a FUTA recertification online:
Go to
Ask EDD
.
Select the
Payroll Tax
category.
Select the
FUTA Recertification
sub-category.
Select the
FUTA Recertification
topic.
Select
Continue
and complete the necessary information.
If you have questions about your request, call our FUTA Recertification Unit at 1-916-654-8545.
e-Services for Business
Use e-Services for Business to manage your employer payroll tax account online.
Log In
Enroll
Stay Up-to-Date
Check
Required Filings and Due Dates
Find
Payroll Tax Webinars
Visit
Employer News and Updates
Get My UI Rate
Get
EDD email notices
Get
Forms and Publications
Contact Us
If you have questions,
Contact Payroll Taxes
. You can also contact the Taxpayer Assistance Center at 1-888-745-3886 or visit your local
Employment Tax Office
.
Additional Resources
Correct Filed Reports, Returns, or Deposits
California Employer’s Guide
(DE 44) (PDF)
Frequently Asked Questions
Determine Taxable Wages and Calculate Taxes Due
Household Employer's Guide
(DE 8829) (PDF)
Skip to Virtual Chat
Leaving the EDD Website
You are about to leave our website.
Leave Website
Language Resources
منابع اللغة (Arabic)
լեզվական ռեսուրսները (Armenian)
منابع زبان (Farsi)
भाषा संसाधन (Hindi)
言語ソース (Japanese)
언어 자료 (Korean)
ធនធានភាសា (Mon-Khmer [Cambodian])
ਭਾਸ਼ਾ ਸਰੋਤ (Punjabi)
Языковые ресурсы (Russian)
语言资源 (Simplified Chinese)
Recursos en otros idiomas (Spanish)
Mga Resource ng Wika (Tagalog)
แหล่งข้อมูลด้านภาษา (Thai)
語言資源 (Traditional Chinese)
Nguồn Hỗ Trợ Ngôn Ngữ (Vietnamese)