description of RC4:

RC4 generates a pseudorandom stream of bits (a keystream) which, for encryption, is combined with the plaintext using bit-wise exclusive-or; decryption is performed the same way (since exclusive-or is a symmetric operation). (This is similar to the Vernam cipher except that generated pseudorandom bits, rather than a prepared stream, are used.) To generate the keystream, the cipher makes use of a secret internal state which consists of two parts:
A permutation of all 256 possible bytes (denoted "S" below).
Two 8-bit index-pointers (denoted "i" and "j").

The permutation is initialized with a variable length key, typically between 40 and 256 bits, using the key-scheduling algorithm (KSA). Once this has been completed, the stream of bits is generated using the pseudo-random generation algorithm (PRGA).

more on wiki

128-bit for this algorithm - recommended key length when the maximum is 256 bit.