Final answer:
The effective FUTA tax rate for 2018 is A. 0.6%. This rate is after the potential credit employers can receive for paying state unemployment taxes on time and in full, reducing the rate from its base of 6.0% to 0.6%.
Step-by-step explanation:
The effective FUTA tax rate for 2018 is 0.6%. This rate applies to the first $7,000 in wages paid to each employee throughout the year.
The FUTA tax, which stands for Federal Unemployment Tax Act, is a payroll tax that employers pay to help fund state workforce agencies. Employers may be eligible for a credit of up to 5.4% against the FUTA tax if they pay state unemployment taxes in full and on time. This can reduce the effective rate from 6.0% to 0.6%.