Federal Unemployment Tax Act (FUTA)

The Federal Unemployment Tax Act (FUTA) is a U.S. law that imposes a payroll tax on employers to fund unemployment benefits for workers who lose their jobs. Employers pay a percentage of each employee's wages, but employees do not contribute to this tax. The funds collected help state unemployment agencies provide financial assistance to eligible unemployed individuals. FUTA is a key part of the social safety net, ensuring support during periods of job loss, and is typically reported annually on a specific tax form.