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The taxes you pay as an employer have a significant impact on your bottom line and your business strategy. Part of this means getting familiar with a number of payroll acronyms like FUTA, FICA, and drum roll, please … the one we’re covering in this article: SUI or SUI tax rate. This stands for State Unemployment Insurance.
Key takeaways about SUI tax rates for employers
- SUI tax rates vary by state, ranging from 0.01% to 10%+
- Rates depend on factors like industry, business experience, and layoff history
- Understanding SUI rates can help businesses budget and plan more effectively
- In most states, employers receive a credit toward their federal unemployment taxes if they’re also paying state unemployment insurance taxes.
This state-specific program is funded by employer contributions (known as SUI taxes), and the purpose is to provide temporary assistance to unemployed workers while they look for new job opportunities.
Here’s your comprehensive state-by-state SUI tax rate breakdown.
How SUI tax rates are calculated
Put simply, employers in all US states and territories must pay SUI taxes on their employees’ salaries. There are only a few exceptions, such as nonprofit organizations and companies with employees that are under 21 years of age. Believe it or not, some states (including Alaska, New Jersey, and Pennsylvania) also require employee contributions.
Each state has its own unemployment insurance program and sets its own SUI rate, eligibility requirements, unemployment benefits, and wage base limit.
Unemployment insurance tax rates vary by state, ranging from about 0.01% to over 10%. The amount you’re required to pay depends on several factors, including:
- Industry: Businesses in some industries, such as construction and seasonal agriculture, pay higher rates.
- Business experience: SUI tax rates often depend on how long a business has been operating, with newer businesses generally paying higher taxes. Many states have an experienced employer rate and a separate rate for new employers.
- Taxable wage base: Your state’s wage base refers to the amount of each employee’s salary subject to SUI taxes (taxable wages) and is adjusted annually to ensure funding needs are met.
- Experience rating: In many states, an employer’s SUI rate is affected by their “experience rating,” which is determined by their history of layoffs (more layoffs lead to higher rates).
- Additional factors: In some states, a company’s size, location, or special programs may affect its SUI rate.
To put this into practice, let’s go through an example. Suppose a company in Texas has an experience rating of 2.5% and a taxable wage base of $9,000. For each employee who earns at least $9,000 per year, the company would be responsible for paying $225 in SUI taxes for that employee (or 2.5% of $9,000).
As a business owner, understanding what the SUI rate means, what your rate is, and how the above factors affect your SUI taxes can help you budget more effectively. In many cases, implementing workforce stability practices and reducing layoffs can help bring down your unemployment taxes over time.
Now that we better understand where these numbers come from, let’s find out more about how employers remit them to their state.
Process for paying unemployment taxes
The process for paying state unemployment taxes varies by state. However, the process generally involves the following steps:
- Register as an employer: You can register by applying with your state’s Department of Labor. You generally need to provide basic information such as your business name, address, contact information, and Employer Identification Number (EIN).
- Record payroll: Keep clear and accurate employee wage records.
- Calculate your SUI tax rate: States will usually provide an annual tax rate notice detailing your business tax rate.
- File necessary forms: Most states require quarterly or annual filing. Forms you need to file may include payroll reports and unemployment tax returns.
- Make payments: You can make payments to the Internal Revenue Service (IRS) electronically or by mail.
Keep in mind that specific rules regarding payment procedures can apply depending on where you do business. For insight, we spoke with Peggy James, a certified public accountant who has been helping small businesses for over a decade.
“Some states require employers to file and pay unemployment insurance taxes online, which means you’ll need to set up an online account on the state’s unemployment insurance website. If this is required for the state or states in which you pay employees, make sure you allow enough time to set up an online account before processing your first payroll.”
— Peggy James, CPA
With the steps to paying employer SUI under our belts, let’s find out what can happen if companies neglect their obligations.
Consequences of failing to meet tax obligations
Please don’t get mad at the messenger, but shirking the SUI tax requirements in your state can have less-than-ideal results. If you fail to file or pay taxes by the due date, you may be subject to strict penalties, fines, and interest charges on overdue payments and/or late filings. These vary from state to state and are typically based on criteria set by the state.
For example, in New York, penalties are assessed on how late a return is filed (and the employer’s past reporting history), but the maximum penalty is $10,000.
In Massachusetts, fines depend on the size of the workforce. For instance, penalties range from $25 to $2,500 for employers.
You may also see an increase in your experience rating, which will raise your rates and future tax liabilities. In some cases, you could even lose your eligibility for state unemployment benefits, such as state-sponsored assistance or federal insurance programs. Over time, failure to comply with tax obligations may result in audits by state tax authorities or even legal action.
State-specific SUI tax rates for 2024
| State | New employer tax rate | Employer tax rate range | Wage base |
| Alabama | 2.7% | 0.2% – 6.8% | $8,000 |
| Alaska | 1.66% | 1.0% – 5.4% | $49,700 |
| Arizona | 2.0% | 0.08% – 20.93% | $8,000 |
| Arkansas | 2.025% | 0.225% – 10.125% | $7,000 |
| California | 3.4% | 1.5% – 6.2% | $7,000 |
| Colorado | 3.05% | 0.81% – 12.34% | $23,800 |
| Connecticut | 2.5% | 1.1% – 7.8% | $25,000 |
| Delaware | 1.0% | 0.3% – 6.5% | $10,500 |
| Florida | 2.7% | 0.1% – 5.4% | $7,000 |
| Georgia | 2.7% | 0.06% – 8.1% | $9,500 |
| Hawaii | 3.0% | 1.7% – 6.2% | $59,100 |
| Idaho | 1.231% | 0.352% – 5.4% | $53,500 |
| Illinois | 3.95% | 0.85% – 8.65% | $13,590 |
| Indiana | 2.5% | 0.5% – 11.2% | $9,500 |
| Iowa | 1.0% | 0.0% – 7.0% | $38,200 |
| Kansas | 2.7% | 0.1% – 6.0% | $14,000 |
| Kentucky | 2.7% | 0.3% – 9.0% | $11,400 |
| Louisiana | Variable | 0.09% – 6.2% | $7,700 |
| Maine | 2.32% | 0.28% – 6.03% | $12,000 |
| Maryland | 2.6% | 0.3% – 7.5% | $8,500 |
| Massachusetts | 1.87% | 0.56% – 8.62% | $15,000 |
| Michigan | 2.7% | 0.06% – 10.3% | $9,500 |
| Minnesota | Variable | 0.1% – 9.0% | $42,000 |
| Mississippi | 1.0% (first year) | 0.0% – 5.4% | $14,000 |
| Missouri | 1.0% (nonprofits) and 2.376% (all other employers) | 0.0% – 5.4% | $10,000 |
| Montana | Variable | 0.0% – 6.12% | $43,000 |
| Nebraska | 1.25% | 0.0% – 5.4% | $9,000 |
| Nevada | 2.95% | 0.25% – 5.4% | $40,600 |
| New Hampshire | 1.7% | 0.1% – 7.5% | $14,000 |
| New Jersey | 3.1% | 1.2% – 7.0% | $42,300 |
| New Mexico | 1.0% (or industry average) | 0.33% – 5.4% | $31,700 |
| New York | 4.1% | 2.025% – 9.825% | $12,500 |
| North Carolina | 1.0% | 0.06 – 5.76% | $31,400 |
| North Dakota | 1.09% (positive balanced employers) and 6.08% (negative balanced employers) | 0.08% – 9.68% | $43,800 |
| Ohio | 2.7% | 0.4% – 10.1% | $9,000 |
| Oklahoma | 1.5% | 0.3% – 9.2% | $27,000 |
| Oregon | 2.4% | 0.9% – 5.4% | $52,800 |
| Pennsylvania | 3.822% | 1.419% – 10.3734% | $10,000 |
| Rhode Island | 1.0% | 1.1% – 9.7% | $29,200 |
| South Carolina | 0.41% | 0.06% – 5.46% | $14,000 |
| South Dakota | 0.2% (plus 0.55% investment fee) | 0.0% – 8.8% | $15,000 |
| Tennessee | 2.7% | 0.01% – 10.0% | $7,000 |
| Texas | 2.7% (or industry average) | 0.25% – 6.25% | $9,000 |
| Utah | Variable | 0.3% – 7.3% | $47,000 |
| Vermont | 1.0% | 0.4% – 5.4% | $14,300 |
| Virginia | 2.5% (plus add-ons) | 0.1% – 6.2% | $8,000 |
| Washington | Variable | 0.27% – $6.02% | $68,500 |
| West Virginia | 2.7% | 1.5% – 8.5% | $9,521 |
| Wisconsin | 3.05% | $0.0% – 12.0% | $14,000 |
| Wyoming | Variable | 0.48% – $9.78% | $30,900 |
Before we go, once more we caught up with Peggy for some parting thoughts regarding SUI.
“If you are a single-member LLC that elects to be taxed as an S corporation, keep in mind that you will be treated as an employee of the business, and the S corporation will be your employer. This means that your business will most likely be responsible for paying state unemployment insurance for you as an employee, so make sure you include this expense in your budget!”
— Peggy James, CPA
Stay updated with the latest 2024 SUI tax rates
Almost all employers need to contribute SUI taxes in some way. These programs provide financial support to workers who have lost their jobs, providing a safety net as they search for new job opportunities. As a “must-do” part of the payroll process, SUI contributions can be complex due to varying state regulations. Fortunately, many online payroll services help companies streamline their SUI obligations, automating contributions and compliance with state-specific requirements. If you ever have questions about how OnPay can help simplify this part of doing business, we’d love to hear from you!
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.