What is the maximum credit for the federal unemployment tax?

The maximum credit for the federal unemployment tax (FUTA) is indeed 5.4%. This figure is significant because employers can earn a credit against the federal unemployment tax rate, which is typically 6.0%, thus reducing their effective tax rate.

Given that employers who pay state unemployment taxes on a timely basis can take advantage of this credit, the effective FUTA tax rate for many employers would be 0.6% instead of the full 6.0%. The 5.4% credit reflects the limit for these credits based on what states do in terms of their unemployment tax contributions.

This structure incentivizes employers to contribute to state unemployment systems, ensuring workers receive benefits during periods of unemployment while also managing tax liabilities according to federal guidelines.