Federal Unemployment Tax Act

The Federal Unemployment Tax Act (FUTA) is a U.S. law that funds state unemployment insurance programs. Employers pay a federal tax on their payroll to help provide temporary financial assistance to workers who lose their jobs through no fault of their own. This tax is typically a small percentage of wages and is used to support unemployment benefits, job training, and administration. The funding helps ensure that workers have some financial cushion while they search for new employment, promoting economic stability during downturns.