Unemployment Compensation Tax

Definition: A payroll tax paid by employers to fund unemployment benefits for workers who lose their jobs. Consists of the Federal Unemployment Tax (FUTA) at 6…

A payroll tax paid by employers to fund unemployment benefits for workers who lose their jobs. Consists of the Federal Unemployment Tax (FUTA) at 6.0% on the first $7,000 of each employee's wages (with a 5.4% credit for state payments) and State Unemployment Tax (SUTA) at rates that vary by state and employer experience rating.