SUTA
SUTA is the state unemployment tax you pay on each employee’s wages up to the state’s wage base, at a rate your state assigns.
- LAW
- Each state’s unemployment insurance law
- RATE
- Set by your state from your experience rating
- CAP
- Each state’s own wage base, usually above $7,000
- WATCH FOR
- One state’s rate applied to another state’s wages
Rates by state
This year's figures for every state, each with its source:
SUTA funds state unemployment insurance (SUI), which pays benefits to eligible people who lose their jobs. SUTA, often expanded as State Unemployment Tax Act, is the payroll shorthand. You pay it in each state where you have covered employment. Each state sets its own wage base, rate range, and experience rating, so rates differ widely. Three states also require an employee share. Paying state tax on time also earns your credit against federal unemployment tax.
How is your rate set?
Federal law requires every state to use experience rating: your rate varies with your record of unemployment risk. Employers with more layoffs and benefit claims pay a higher rate; a stable workforce pays less. A new employer can start at a reduced rate of at least 1.0% until it has enough experience. Qualifying for a computed rate generally takes more than three years of coverage and contributions.
| PIECE | WHAT TO EXPECT |
|---|---|
| Rate | Set by your state from your experience rating |
| New employer rate | A reduced rate, at least 1.0%, until you qualify |
| Wage base | $7,000 in a few states; almost all set it higher |
| Employee share | Alaska, New Jersey, and Pennsylvania only |
| SUI rate notice | Your state’s notice of the rate it assigns for each rate year, from its effective date |
Which state gets the wages?
In general, an employee is covered by the law of the state where the work is performed. When one employee works in several states, you generally report the wages to one state, not necessarily your headquarters state. States ordinarily apply the same tests in the same order. If none settles it, state laws generally let you, your employees, and the states agree on one through a reciprocal coverage arrangement.
- 01
Localization. Use the state where the employee’s service is localized, if there is one.
- 02
Base of operations. If not, use the base-of-operations state, if the employee performs some service there.
- 03
Direction and control. If not, use the state the service is directed or controlled from, if some service happens there.
- 04
Residence. Last, use the state where the employee lives, if some service happens there.
Frequently asked
- Unemployment Insurance Tax Topic
- Comparison of State Unemployment Laws 2023
- 26 U.S. Code § 3302 - Credits against tax
- Instructions for Form 940 (2025)
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.