FUTA stands for Federal Unemployment Tax which funds state unemployment programs. The employer is responsible for paying the FUTA premium and no deduction is made from the paycheque of the employee. FUTA is similar to the EI (The Employment Insurance in Canada). The only difference is that in the United States the employer is responsible to pay this. FUTA in the United States pays to unemployment compensation to an employee when an employee has lost his job. To learn more, please visit our blog “Payroll processing in the United States.”