Federal Unemployment Tax Act (FUTA) Updates for 2026

The Federal Unemployment Tax Act (FUTA) helps fund unemployment benefits for workers who lose their jobs.

With the mass unemployment that resulted from the COVID-19 pandemic, many states had to borrow from the Federal government in order to pay unemployment benefits. As a result, a few states still have outstanding loans to the government that will result in higher FUTA taxes being paid by employers in those states in 2026. Understanding the new FUTA rates and credit reductions is key for accurate budgeting and compliance.

The FCR, BCR, and FUTA rates that will be charged for 2026 are listed below.

*The estimated California Benefit Cost Rate (BCR) for the 2025 tax year is 3.70%. The 2026 BCR rate is currently pending and will be updated as soon as information is released by the U.S. Department of Labor.

** Maximum FUTA tax per employee per project per year.

What is FUTA tax? 

FUTA, Federal Unemployment Tax Act, is a federal employer-paid payroll tax that funds unemployment benefits and is reported on Form940.

How can employers calculate their 2026 FUTA liability? 

Employers should assume a .6% FUTA rate on the first $7,000 in wages for all states with an additional percentage to be charged to cover the FUTA Credit Reduction (FCR) and BCR Add-On rate (BCR).

Review your payroll records to identify employees subject to FUTA, and adjust your budgets to reflect the increased rates in the affected states. Learn more about FUTA credit reductions.

Navigating payroll for your production? Specialized production payroll support, from platforms like GreenSlate, can help avoid under, or over, accruing taxes. 

Contact our Sales team to streamline your production payroll today. 

This information in this communication is general in nature, and is not intended, nor should it be construed, as legal, accounting, tax or other professional advice rendered by GreenSlate, LLC. The reader should contact his or her attorney, CPA, or tax professional prior to taking any action based upon this information.