State unemployment tax
| 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. |
| Unemployment insurance |
|---|
|
| • Terms and definitions • Court cases • Unemployment insurance programs in the states • Reform proposals related to unemployment insurance • Reform activity in the states related to unemployment insurance • Index of articles about unemployment insurance |
| Click here for more coverage of unemployment insurance on Ballotpedia |
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 range of SUTA tax amounts across states in 2023:[3][5]
- Regular rates ranged from 0% for employers with the lowest experience rating in six states up to 18.78% of each employee's base wage in Arizona for employers with the highest experience ratings.
- The new employer rate ranged from 0.45% in South Carolina to 4.0% in Hawaii.
- California, Florida, and Tennessee had the lowest wage bases at $7,000. Washington had the highest wage base at $67,600.
The table below outlines new employer SUTA tax rates, regular rate ranges for experienced employers, and wage bases for all 50 states as of 2023.
| State unemployment tax rates | |||
|---|---|---|---|
| State | SUTA new employer tax rate | Employer tax rate range[6] | SUTA wage bases |
| Alabama | 2.70% | 0.65% – 6.8% (including employment security assessment of 0.06%) | $8,000 |
| Alaska | Standard rate 2.37% (0.51% employee share) | 1.51% – 5.91% | $46,800 |
| Arizona | 2.00% | 0.07% – 18.78% | $8,000 |
| Arkansas | 3.10% | 0.1% – 14% (including solvency surtax) | $10,000 |
| California | 3.40% | 1.5% – 6.2% (+ emergency 15% surcharge) | $7,000 |
| Colorado | 1.70% | 0.75% – 10.39% | $20,400 |
| Connecticut | 2.8% | 1.7% – 6.6% | $15,000 |
| Delaware | 1.80% | 0.1% - 5% | $14,500 |
| Florida | 2.70% | 0.1% – 5.4% | $7,000 |
| Georgia | 2.70% | 0.04% – 7.56% | $9,500 |
| Hawaii | 4.0% | 1.2% - 6.2% | $55,800 |
| Idaho | 1.071% (including the workforce rate tax of 0.03%) | 0.207% – 5.4% | $50,000 |
| Illinois | 3.95% | 0.03% – 8.1% (plus fund building of 0.55%) | $12,960 |
| Indiana | 2.50% | 0.5% – 7.4% | $9,500 |
| Iowa | 1.00% | 0.0% – 7% | $36,100 |
| Kansas | 2.70% | 0.17% – 6.4% | $14,000 |
| Kentucky | 2.70% | 0.3% – 9.0% | $10,800 |
| Louisiana | Varies | 0.09% – 6.2% | $7,700 |
| Maine | 2.19% | 0.22% – 5.69% | $12,000 |
| Maryland | 2.3% | 1.0% – 10.5% | $8,500 |
| Massachusetts | 1.43% | 0.56% – 8.62% | $15,000 |
| Michigan | 2.70% | 0.6% – 10.3% | $9,500 |
| Minnesota | Varies | Maximum of 8.9% (with a base tax rate of 0.10%) | $41,000 |
| Mississippi | 1.0% (1st year), 1.1% (2nd year), 1.2% (3rd year) | 0.0% – 5.4% | $14,000 |
| Missouri | 2.7% | 0.0% – 6.0% (does not include maximum rate surcharge or contribution rate adjustment) | $10,500 |
| Montana | Varies | 0.13% – 6.3% (includes AFT rate of 0.13% - 0.18%) | $40,900 |
| Nebraska | 1.25% | 0% – 5.4% | $9,000; $24,000[7] |
| Nevada | 2.95% | 0.25% – 5.4% | $40,100 |
| New Hampshire | 2.7% | 0.1% – 7.0% | $14,000 |
| New Jersey | 3.1% (including Workforce Development and Supplemental Workforce Funds); Employee rate of 0.425% (including the Workforce Development and Supplemental Workforce Funds) | 0.6% – 6.4% (employee rate of 0.425%) | $41,100 |
| New Mexico | 1.0% or the industry average rate, whichever is greater | 0.33% – 5.4% | $30,400 |
| New York | 3.13% | 0.6% – 7.9% (including RSF tax of 0.75%) | $12,300 |
| North Carolina | 1.00% | 0.06% – 5.76% | $30,000 |
| North Dakota | 1.13% (positive balance); 6.29% (negative balance) | 0.08% – 9.97% | $38,400 |
| Ohio | 2.70% | 0.3% – 9.8% | $9,000 |
| Oklahoma | 1.50% | 0.3% – 9.2% | $25,700 |
| Oregon | 2.1% | 0.7% – 5.4% | $51,600 |
| Pennsylvania | 3.822% | 1.419% – 10.3734% | $10,000 |
| Rhode Island | 1.09% (including the 0.21% Job Development Assessment) | 1.1% – 9.7% | $24,600; $26,100[7] |
| South Carolina | 0.45% (including the 0.06% contingency surcharge) | 0.06% – 5.46% (including the 0.06% contingency surcharge) | $14,000 |
| South Dakota | 1.20% (+ 0.55% investment fee) | 0% – 9.5% | $15,000 |
| Tennessee | 2.70% | 0.01% – 10% | $7,000 |
| Texas | 2.7% (or the industry average rate, whichever is greater) | 0.23% – 6.23% | $9,000 |
| Utah | Varies | 0.3% – 7.3% | $44,300 |
| Vermont | 1.0% (for most employers) | 0.4% – 8.4% | $13,500 |
| Virginia | 2.50% (plus add-ons) | 0.1% – 6.2% | $8,000 |
| Washington | Varies | 1.25% – 8.15% | $67,600 |
| West Virginia | 2.7% (for most employers) | Not available | $9,000 |
| Wisconsin | 3.05% for new employers with payroll < $500,000; 3.25% for new employers with payroll > $500,000 | 0% – 12% | $14,000 |
| Wyoming | Varies | 0.48% – 9.78% | $29,100 |
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
- 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
Footnotes
- ↑ Washington State Legislature, "Washington State's Experience Rating System," accessed July 6, 2021
- ↑ Employment Law Firms, "How Unemployment Works," accessed May 18, 2021
- ↑ 3.0 3.1 Patriot, "What Is My State Unemployment Tax Rate?" accessed March 8, 2023
- ↑ Ernst & Young LLP, "State unemployment insurance wage bases for 2020," December 12, 2019
- ↑ APS Payroll, "SUTA WAGE BASES," accessed March 9, 2023
- ↑ Dependent on employer's experience rating.
- ↑ 7.0 7.1 Experienced Nebraska and Rhode Island employers that are assessed the maximum unemployment tax rate are assigned a higher wage base.
- ↑ 8.0 8.1 U.S. Department of Labor, "Report Unemployment Insurance Fraud," accessed May 20, 2021
- ↑ 9.0 9.1 Work It Daily, "Are You Committing Unemployment Insurance Fraud By Accident?" April 14, 2020
| |||||||||||
