Federal Unemployment Tax Act (FUTA)

Federal Unemployment Tax Act (FUTA)

The Federal Unemployment Tax Act (FUTA) provides guidelines for the unemployment compensation system. A Federal tax is paid by all employers subject to the tax to fund the administration of Federal and State unemployment insurance programs and the extended benefits program. FUTA provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax.

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