by the Brightmine Editorial Team
Employers are liable for federal unemployment insurance tax, based on the wages they pay to their employees, up to a taxable wage base of $7,000 per year. Wages paid to employees that exceed the federal taxable wage base are not subject to federal unemployment taxes. The $7,000 wage base is set by law and can only increase or decrease if Congress passes legislation changing it. Federal unemployment taxes support functions of the federal Department of Labor’s Employment and Training Administration, as well as certain administrative functions of state unemployment agencies.
Similarly, most employers also pay state unemployment insurance contributions, based on the wages they pay to their employees, up to a state taxable wage base. These contributions fund unemployment benefits for employees who lose their jobs through no fault of their own. Some states set their taxable wage base in law, while other states inflation-adjust it every year.
A handful of states also have disability insurance systems with employer and/or employee contributions tied to a taxable wage base. The disability wage base may, but is not required to, be the same as the state unemployment insurance wage base. In addition, Massachusetts has a taxable wage base for Employer Medical Assistance Contributions (EMAC).
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About the author
The Brightmine Editorial Team
Our in-house team of HR experts carefully monitors and updates the Brightmine HR & Compliance Center, the most comprehensive library of employment law and HR resources. This team has an unrivaled wealth of subject matter expertise, with an average of 15 years’ experience. They also bring invaluable, diverse career experiences to the table—the team includes seasoned employment law attorneys, former in-house counsel, SHRM certified professionals and career employment law editors.
In addition to managing the HR & Compliance Center, the Editorial Team supports the content across the Brightmine product portfolio. The Team also supports Marketing Resource Center with breaking HR news, Commentary and Insights, and expert review of key compliance resources, such as our free charts.