A California employer paid one employee $30,000 of wages in tax year 2025. FUTA is 6.0% on the first $7,000 of each employee's wages, and California's 5.4% state credit was cut by a 1.2% credit reduction that year. What FUTA tax does the employer owe on this employee?

Explicación

Work the rate first, then the base. The 6.0% statutory rate less the 5.4% credit gives 0.6%, and California's 1.2% credit reduction for 2025 puts it back to 1.8%. FUTA is charged only on the first $7,000 of each employee's wages, not on everything paid, so 1.8% of $7,000 is $126. The $42 answer forgets that the credit was reduced; the $540 and $1,800 answers charge the tax against the whole $30,000.