State unemployment taxes are employment taxes employers must pay to support the joint federal-state unemployment insurance program. State unemployment taxes are also known as SUTA taxes, state unemployment insurance (SUI) taxes, or reemployment taxes.
Employers usually pay a percentage of an employee’s salary in SUTA taxes up to the wage base (the maximum amount of wages per employee on which an employer must pay unemployment taxes). The SUTA tax rate varies by state and by the employer’s experience rating, which allows states to collect unemployment taxes from employers according to the amount of unemployment insurance benefits drawn by their former employees. The more unemployment claims an employer has, the higher their experience rating and state unemployment tax (SUTA) rate.
For example, Alabama’s wage base is $8,000 and the maximum SUTA tax rate is 6.8% (for employers with many unemployment claims). The maximum SUTA tax an Alabama employer could pay per employee would be $544.
New employers usually start out paying a flat SUTA tax rate for the first few years until they become experience-rated.
The following list provides a summary of the range of SUTA tax amounts across states in 2021:
- Regular rates ranged from 0% for employers with the lowest experience rating in seven states up to 20.6% of each employee’s base wage in Arizona for employers with the highest experience ratings.
- The new employer rate ranged from 0.55% in South Carolina to 3.69% in Pennsylvania.
- Arizona, California, Florida, Georgia, and Tennessee had the lowest wage bases at $7,000.
- Washington had the highest wage base at $56,500.
To learn more about your state’s unemployment tax amounts, click here.