Federal Law Unemployment insurance is a joint federal and state program that provides temporary financial assistance to eligible workers. Each state administers its own program within guidelines established by federal law. Eligibility, benefit amounts, and the length of time benefits are available are determined by the state law under which unemployment insurance claims are established. Eligibility To be eligible for unemployment insurance benefits, former employees generally must: Satisfy the state requirements for wages earned or time worked during an established period of time referred to as a "base period." Be unemployed through no fault of the employee's own (as determined under state law), and meet other eligibility requirements of state law. Benefits Unemployment benefits vary from state to state. In general, benefits are based on a percentage of an individual's earnings over a recent 52-week period, up to a state maximum amount. Benefits can be paid for a maximum of 26 weeks in most states, but additional weeks of benefits (called extended benefits) may be available during times of high unemployment. Unemployment Insurance Taxes Most employers pay both a federal and a state unemployment tax. The federal unemployment tax is used to fund state workforce agencies. Employers pay this tax annually by filing IRS Form 940. In addition, the federal unemployment tax pays one-half of the cost of extended unemployment benefits (during periods of high unemployment) and provides for a fund from which states may borrow, if necessary, to pay benefits. The state unemployment tax, paid to state workforce agencies, is used solely for the payment of benefits to eligible unemployed workers. All states finance unemployment insurance primarily through required contributions from employers on the wages of their covered workers. A few states also require minimal contributions from employees.