FUTA (Federal Unemployment Tax Act)

The Federal Unemployment Tax Act (FUTA) is a law in the United States that establishes a federal tax collected from employers to fund unemployment benefits for workers who lose their jobs. Employers pay a percentage of their employees' wages, which goes into a federal unemployment trust fund. This fund helps provide financial assistance to unemployed individuals while they search for new jobs. FUTA is primarily aimed at supporting state unemployment insurance programs, ensuring that workers have a safety net in times of economic hardship. Employers benefit by receiving tax credits if they contribute to state unemployment programs.