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State unemployment tax

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Unemployment insurance
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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State unemployment tax is a term that refers to the state employment taxes employers must pay to support the unemployment insurance program. State unemployment taxes are also known as SUTA taxes, state unemployment insurance (SUI) taxes, or reemployment taxes. Each state sets its own tax rate range, wage base (the amount of pay an employer needs to pay taxes on for each employee), and experience rating system.

Employers also pay federal unemployment taxes under the Federal Unemployment Tax Act (FUTA).

Background

State unemployment tax revenues are transferred to the appropriate State Unemployment Trust Fund account in the federal Unemployment Trust Fund. Each state uses the money in its fund to pay regular unemployment benefits and its share of extended benefits.[1]

New employers begin paying into the unemployment insurance system at the new employer rate. Depending on state laws, employers that have paid unemployment insurance taxes for a set time period (usually a few years) receive an experience rating. The more unemployment claims an employer has, the higher their tax rate.[2]

Alaska, New Jersey, and Pennsylvania also require employees to contribute to unemployment taxes.[3][4]

What is my state unemployment tax rate? | Unemployment tax rates by state

SUTA tax amounts vary by state. The following list provides a summary of the SUTA tax amounts across states as of January 2025:[3][5][6]

  • The new employer rate ranged from 0.35% in South Carolina to 6.09% in some cases in North Dakota.
  • Regular rates ranged from 0% for employers with the lowest experience rating in 10 states (Iowa, Missouri, Mississippi, Montana, Kansas, Nebraska, New York, South Dakota, Wisconsin, and Wyoming) up to 12.65% in Massachusetts for employers with the highest experience ratings.
  • Arkansas, California, Florida, and Tennessee had the lowest wage bases at $7,000, and Washington had the highest wage base at $72,800.

The table below outlines regular SUTA tax rate ranges for experienced employers and wage bases and new employer SUTA tax rates for all 50 states as of January 2025.

State unemployment tax rates
State SUTA new employer tax rate Employer tax rate range[7] SUTA wage bases
Alabama 2.7% 0.20% – 6.80% $8,000
Alaska 1.0% 1.00% – 5.40% $51,700
Arizona 2.0% 0.04% – 9.72% $8,000
Arkansas 2.0% 0.1% – 5.0% $7,000
California 3.4% 1.5% – 6.2% $7,000
Colorado 3.05% 0.64% – 12.34% $27,200
Connecticut 2.2% 0.1% – 10.0% $26,100
Delaware 1.0% 0.3% – 5.4% $12,500
D.C. 2.7% or prior year average 1.00% – 7.40% $9,000
Florida 2.7% 0.1% – 5.4% $7,000
Georgia 2.7% 0.06% – 8.1% $9,500
Hawaii 2.4% 2.4% – 5.6% $62,000
Idaho 1.0% 0.23% – 5.4% $55,300
Illinois 3.65% 0.75% – 7.85% $13,916
Indiana 2.5% 0.5% – 11.2% $9,500
Iowa 1.0% 0.0% – 7.0% $39,500
Kansas 1.75% 0.0% – 6.65% $14,000
Kentucky 2.7% 0.3% – 9.0% $11,700
Louisiana Varies 0.09% – 6.2% $7,700
Maine 2.41% 0.3% – 6.27% $12,000
Maryland 2.6% 0.3% – 7.5% $8,500
Massachusetts 2.13% 0.83% – 12.65% $15,000
Michigan 2.7% 0.06% – 10.3% $9,000
Minnesota Varies 0.4% – 8.9% $43,000
Mississippi 1.0% 0.0% – 5.4% $14,000
Missouri 1.0% (nonprofits) 2.376% (others) 0.0% – 6.0% $9,500
Montana Varies 0.00% – 6.12% $45,100
Nebraska 1.25% 0.0% – 5.4% $9,000 ($24,000 for max rate)
Nevada 2.95% 0.25% – 5.4% $41,800
New Hampshire 2.7% 1.00% – 7.00% $14,000
New Jersey 3.1% 0.6% – 6.4% $43,300
New Mexico 1.0% 0.33% – 5.4% $33,200
New York 4.1% 0.0% – 8.9% $12,800
North Carolina 1.0% 0.06% – 5.76% $32,600
North Dakota 1.03% (positive) 6.09% (negative) 0.08% – 9.69% $45,100
Ohio 2.7% 0.5% – 10.2% $9,000
Oklahoma 1.5% 0.3% – 9.2% $28,200
Oregon 2.4% 0.9% – 5.4% $54,300
Pennsylvania 3.822% 1.42% – 10.37% $10,000
Rhode Island 1.21% 1.1% – 9.7% $29,800 ($31,300 for negative balance)
South Carolina 0.35% or 1% 0.06% – 5.46% $14,000
South Dakota 1.2% 0.0% – 8.8% $15,000
Tennessee Varies 0.01% – 10.0% $7,000
Texas 2.7% 0.25% – 6.25% $9,000
Utah Varies 0.2% – 7.2% $48,900
Vermont 1.0% 0.4% – 5.4% $14,800
Virginia 2.5% 0.1% – 6.2% $8,000
Washington Varies 0.27% – 8.15% $72,800
West Virginia 2.7% 1.5% – 8.5% $9,500
Wisconsin 3.05% (<$500k payroll) 3.25% (>$500k payroll) 0.0% – 12.0% $14,000
Wyoming Varies 0.0% – 8.5% $32,400

Penalties for nonpayment

Businesses that falsely classify employees as independent contractors, neglect to report wages, or set up fictitious employer accounts to avoid unemployment tax liabilities have committed unemployment insurance fraud.

State laws governing unemployment insurance may classify unemployment insurance fraud as either a misdemeanor or felony offense, depending on the extent of the fraud. Federal guidelines require states to assess a minimum penalty of 15% of the amount of the fraudulent claim, according to the U.S. Department of Labor. States generally prohibit individuals found guilty of committing unemployment insurance fraud from receiving future benefits for a minimum of six weeks for every week of fraudulent claims.[8][9]

Criminal prosecution under unemployment insurance laws may result in the following penalties, depending on the state:[8][9]

  • Fines up to or exceeding $10,000, depending on the state.
  • Incarceration.
  • Probation in addition to, or in lieu of, incarceration.
  • Repayment of fraudulent benefits.
  • Forfeiture of future income tax refunds.
  • Permanent loss of eligibility for unemployment insurance benefits.

See also

External links

Footnotes

  1. ↑ Washington State Legislature, "Washington State's Experience Rating System," accessed July 6, 2021
  2. ↑ Employment Law Firms, "How Unemployment Works," accessed May 18, 2021
  3. ↑ 3.0 3.1 Patriot, "What Is My State Unemployment Tax Rate?" accessed March 8, 2023 Cite error: Invalid <ref> tag; name "patriot" defined multiple times with different content
  4. ↑ Ernst & Young LLP, "State unemployment insurance wage bases for 2020," December 12, 2019
  5. ↑ APS Payroll, "SUTA WAGE BASES," accessed March 12, 2025
  6. ↑ Paycom, "SUTA Tax Rate 2024: All You Need to Know," accessed March 12, 2025
  7. ↑ Dependent on employer's experience rating.
  8. ↑ 8.0 8.1 U.S. Department of Labor, "Report Unemployment Insurance Fraud," accessed May 20, 2021
  9. ↑ 9.0 9.1 Work It Daily, "Are You Committing Unemployment Insurance Fraud By Accident?" April 14, 2020
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