If an employer qualifies for a lower state unemployment tax rate,this lowers the credit allowed in computing the federal unemployment tax due.

Question

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The credit allowed in computing the federal unemployment tax is generally fixed and does not vary with the state unemployment tax rate an employer qualifies for. The federal credit is designed to encourage employers to pay into their state unemployment systems, but the amount of the credit does not change based on the state rate an employer pays.

If an Employer Qualifies for a Lower State Unemployment Tax