The Federal Unemployment Tax (FUTA) is a payroll tax that employers pay to fund unemployment benefits for workers who lose their jobs. This tax is collected by the federal government and is used to support state unemployment insurance programs. Employers typically pay 6% on the first $7,000 of each employee's wages, although they may receive a credit for state unemployment taxes paid. FUTA is important because it helps provide financial assistance to unemployed individuals, allowing them to support themselves while they search for new jobs. The funds collected through this tax are essential for maintaining the stability of the overall economy during times of high unemployment.