Federal Unemployment Tax Act

Federal Unemployment Tax Act definition - business

Federal Unemployment Tax Act

Federal legislation that authorizes the Internal Revenue Service to collect a federal employer tax used for payments of unemployment compensation to workers who have lost their jobs. The federal tax is equal to 6.2% of the first $7,000 paid in wages to each employee during a calendar year. Employers who pay a state unemployment tax receive an offset credit of up to 5.4%.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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