Federal Unemployment Tax Act

Definition

FUTA. A federal law that taxes businesses in order to fund the unemployment benefits set forth by the Social Security Act of 1935. In times of economic growth, revenues from the tax increase but are used less frequently because unemployment levels are low, creating a cushion of funds. During times of slowing growth and rising unemployment, this cushion can provide benefits to the unemployed.

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Economic Recovery Tax Act of 1981 Tax Equity and Fiscal Responsibility Act of 1982