Employment Taxes

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How is the joint federal-state unemployment insurance program funded?

Federal and state unemployment taxes fund the joint federal-state unemployment insurance program. Federal unemployment tax revenues fund accounts in the federal Unemployment Trust Fund (UTF) that pay for federal and state unemployment insurance program administration costs, the federal portion of extended benefits, and loans to State Unemployment Trust Funds. State unemployment tax revenues fund State Unemployment Trust Funds, which pay regular benefits and the state portion of extended benefits. Read more about unemployment taxes here.

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Employment taxes are federal and state taxes employers pay to a taxing authority. Depending on the tax, employers either pay employment taxes themselves or withhold taxes from employee paychecks. Employment taxes include Social Security and Medicare taxes, federal and state income taxes, and federal and state unemployment taxes.

Federal employment taxes[edit]

See also: Federal unemployment tax

The Internal Revenue Service (IRS) collects the following federal employment taxes:[1]

  • Federal income taxes - Employers withhold a portion of employees' salaries to cover their federal income tax liabilities.
  • Social Security and Medicare taxes - Employers withhold a portion of employees' salaries for the Social Security and Medicare programs. Employers match employee contributions to the programs.
  • Federal Unemployment Tax Act (FUTA) taxes - Employers pay FUTA taxes to support the joint federal-state unemployment insurance program.
  • Self-employment taxes - Individuals who work for themselves pay self-employment taxes to cover their Social Security and Medicare tax liabilities.

State employment taxes[edit]

See also: State unemployment tax

State tax collection agencies collect the following state employment taxes:[2]

  • State income taxes - Employers withhold a portion of employees' salaries to cover their state income tax liabilities, where applicable.
  • State unemployment (SUTA) taxes - Employers pay SUTA taxes to support the joint federal-state unemployment insurance program. Employees in Alaska, New Jersey, and Pennsylvania also pay state unemployment taxes.

See also[edit]

  • Unemployment insurance
  • Unemployment insurance fraud
  • Unemployment insurance fraud recovery
  • Unemployment taxes
  • Unemployment Trust Fund
  • Unemployment filings during the coronavirus (COVID-19) pandemic, 2020-2021
  • State government plans to end federal unemployment benefits related to the coronavirus (COVID-19) pandemic, 2021

External links[edit]

  • Search Google News for this topic

Footnotes[edit]

  1. ↑ Internal Revenue Service, "Understanding Employment Taxes," accessed July 12, 2021
  2. ↑ The Balance Small Business, "All the Types of Employment Taxes," accessed July 12, 2021
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Unemployment insurance
Terms
Unemployment insurance • Unemployment insurance fraud • Unemployment insurance fraud recovery • Employment taxes • Federal Unemployment Tax • Unemployment Trust Fund • State Unemployment Trust Funds • Indexing unemployment benefits • Experience rating • Refusal of work • Integrity Data Hub • Unemployment extension • Work search activity
Unemployment insurance programs in the states
Unemployment insurance programs in the states • Unemployment insurance fraud in the states • History of unemployment insurance fraud in the states
Reform proposals
Reform proposals related to unemployment insurance • Unemployment insurance reform activity in the states

Categories: [Unemployment insurance terms]

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