Legislation under which federal and state governments require employers (and, in some states, employees) to contribute to a fund that pays unemployment insurance benefits.
It requires employers to pay a certain percentage of their employees' wages (up to a maximum wage limit) as a payroll tax to help fund unemployment compensation benefits for separated employees.
Federal legislation in the United States that, when combined with individual state laws, provides covered individuals with protection against loss of income resulting from unemployment.
FUTA. The tax that employers pay to fund unemployment compensation programs.
The Federal Unemployment Tax Act (or FUTA, ) is a United States federal law that authorizes the Internal Revenue Service to collect a federal employer tax used to fund state workforce agencies. Employers pay this tax annually by filing IRS Form 940. FUTA covers the costs of administering the unemployment insurance (UI) and job service programs in all states.