Washington ESD employer asking about current federal unemployment tax rate - need help

The federal unemployment tax rate (FUTA) is currently 6.0% on the first $7,000 of each employee's wages annually. However, most employers get a credit of up to 5.4% for paying state unemployment taxes on time, bringing the effective FUTA rate down to 0.6%. Since Washington state has its own unemployment insurance program through Washington ESD, you should qualify for this credit.

wait i thought it was higher than that? my accountant told me something different last year

I've been dealing with Washington ESD for years and the federal rate has been stable at 6% with the 5.4% credit for quite a while now. The key thing is making sure you're filing your quarterly 940 forms correctly and that you're not late with your state payments to Washington ESD. If you fall behind on state payments, you can lose that federal credit.

This is exactly why I started using Claimyr to talk to Washington ESD representatives directly when I have payroll tax questions. Instead of guessing or getting conflicting info online, I can actually speak to someone who knows the current rules. They have this service at claimyr.com that helps you get through to ESD agents without waiting on hold forever. There's even a demo video at https://youtu.be/7DieNd3C7zQ showing how it works.

just a heads up - the $7000 wage base hasnt changed in forever but the rates can vary by state for the state portion. washington esd has their own rate schedule

For 2025, the federal unemployment tax rate remains at 6.0% on wages up to $7,000 per employee per year. With the standard 5.4% credit for timely state tax payments, your effective federal rate should be 0.6%. This hasn't changed in several years. Washington state is not currently subject to any credit reductions, so you should get the full credit as long as you're current with Washington ESD.

ugh payroll taxes are so confusing. between federal and state and all the different rates i never know if im doing it right

One thing to watch out for - if you have employees in multiple states, the rules can get more complex. But if you're just dealing with Washington state employees, it's pretty straightforward with Washington ESD handling the state portion and the federal 6%/0.6% rate structure.

I remember when my business first started and I was so confused about all these different tax rates. The federal unemployment tax seemed really high until I learned about the credit. Now I just make sure to pay my Washington ESD quarterly reports on time and budget for the 0.6% federal rate.

does anyone know if theres been any talk about changing the federal rate? seems like $7000 wage base is pretty low compared to what people actually earn now

Another thing to consider is timing of your payments. If you owe less than $500 in FUTA tax for the year, you don't have to make quarterly deposits - you can just pay it annually with your Form 940. But you still need to stay current with Washington ESD regardless.

i use a payroll service and they handle all this stuff automatically. worth the cost imo especially for the tax compliance piece

Just want to echo what others have said about the 6% federal rate with 5.4% credit. Been doing payroll for 15 years and this structure has been consistent. The only time you lose the credit is if your state falls behind on federal loans, which Washington hasn't had issues with.

wait so if i have 5 employees making $50000 each i only pay federal unemployment tax on the first $7000 of each persons wages? so $35000 total taxable wages?

Pro tip: set up automatic payments for both your Washington ESD quarterly reports and your federal deposits. Takes the guesswork out of due dates and helps you avoid penalties that could affect your credit.

Someone mentioned Claimyr earlier - I actually used them last month when I had questions about my Washington ESD account. Way easier than trying to get through on the phone myself. Really helpful for employer-related questions too.

this thread has been super helpful. i was worried i was calculating my payroll taxes wrong but sounds like im on the right track with the 0.6% federal rate

For anyone still confused about the math: $7,000 wage base × 0.6% effective rate (after credit) = maximum $42 per employee per year in federal unemployment tax. Pretty manageable for most small businesses.

Thanks everyone for all the clarification on this. I feel much more confident about my payroll tax calculations now. The 6% federal rate with 5.4% credit bringing it down to 0.6% makes total sense, and knowing it only applies to the first $7,000 per employee helps a lot with budgeting.