What is SUTA? State unemployment tax, rates, and wage bases

What SUTA means

SUTA is short for State Unemployment Tax Act. People use it for the tax itself. You will also see SUI, for state unemployment insurance, and UI. Florida calls it reemployment tax. They are the same kind of tax: money the employer pays into the state fund that pays unemployment benefits.

The U.S. Department of Labor, or DOL, explains the setup on its unemployment insurance tax page. It says unemployment insurance is a federal-state program paid for by federal and state employer payroll taxes. It says state law sets each state’s tax rates. It also says the state tax is used only to pay benefits to eligible unemployed workers.

SUTA is almost always an employer tax. You do not take it out of the paycheck. Texas bars deducting the unemployment contribution from wages. Florida bars taking reemployment tax from wages.

SUTA and FUTA

FUTA is the federal unemployment tax. You pay both, and they are linked. The IRS Form 940 instructions set FUTA at 6.0 percent of the first $7,000 per worker, with a credit of up to 5.4 percent for state unemployment tax. Pay SUTA in full and on time, and FUTA drops to 0.6 percent. Pay late, and you can lose part of that credit. Form 940 and FUTA tax covers the federal side.

How SUTA is figured

Three numbers decide the bill.

1. The wage base. The state taxes each worker’s wages only up to this amount each calendar year. After that, the rest of that person’s pay is not taxed.
2. Your rate. The state assigns it and sends you a notice.
3. Extra pieces some states add, such as a training or administration charge, shown on the same notice.

The math for one worker is: wages up to the base, times your rate. Say a worker earns $40,000 in a year in a state with a $9,000 wage base and a 2.7 percent rate. You pay 2.7 percent of $9,000, which is $243, for that worker for the year. These are example figures you can redo for your state.

The new-employer rate

A new business has no claims history, so the state assigns a starting rate. Some states use one rate for most new employers. Some use the average for your industry. The starting rate lasts a set time. Then the state switches you to an experience rate.

The experience rate is tied to the unemployment benefits charged to your account. Each state sets its own formula. The Washington Employment Security Department says new employers there pay 115 percent of the average rate for their industry in 2026, and stop being treated as new after two and a half to three years.

2026 rates and wage bases in eight states

This table is a starting point, not your rate. Each line links to the state page on this site or to the agency.

Where these come from:

• California: the Employment Development Department rates page lists the $7,000 limit and a 3.4 percent new-employer rate for two to three years. EDD is the state payroll-tax office. The same page lists a separate 0.1 percent Employment Training Tax on the same $7,000.
• Texas: the Texas Workforce Commission tax-rates page lists 2.70 percent for every industry group in 2026, a range of 0.32 to 6.32 percent, and the $9,000 wage base set by statute.
• Indiana: the Department of Workforce Development says most new employers pay 2.5 percent for their first four calendar years. Construction can differ. The Indiana page cites the $9,500 wage base.
• Arkansas: the Arkansas page cites the Division of Workforce Services for 2.0 percent and $7,000. You register on Tax21, the state’s unemployment tax system. Arkansas Tax21 walks through the portal.
• Illinois: the Illinois page cites the 2026 EA-50 from the Illinois Department of Employment Security for $14,250 and 3.350 percent.
• New York: the New York DOL quarterly reporting page lists $17,600 for 2026.
• Oregon: the Oregon page cites the Oregon Employment Department for $56,700 and 2.4 percent.
• Washington: the Employment Security Department page above lists $78,200.

The spread is wide. A worker earning $60,000 is taxed on $7,000 in California and on $56,700 in Oregon. Do not budget one state’s number for a worker in another.

One worker, two states

Use the table to see how far apart two states can be for the same pay. Say a new worker earns $50,000 in the year. These are example figures you can redo.

• In Texas, at the 2.70 percent new-employer rate on the $9,000 base: $243 for the year.
• In California, at the 3.4 percent new-employer rate on the $7,000 base: $238 for the year, plus the separate 0.1 percent training tax, $7.
• In Washington, the base is $78,200, so all $50,000 is taxable. At a rate of 1.0 percent, for example, that is $500. Your real Washington rate comes from your industry average.

In this example the wage base moves the bill more than the rate. Check both for each state where you have a worker.

Registering, reporting, and paying

You open a state unemployment tax account before or soon after the first payday. Each state sets its own trigger and clock. Most states then want a quarterly wage report listing each worker’s pay, and a quarterly payment. Each state page on this site has that clock and the agency link.

Keep each rate notice the state sends. Your payroll setup should use the rate on it. A wrong rate in the software repeats on every payday.

Can you lower your SUTA rate?

Not as a new employer. The starting rate is set by the state. After that, the rate follows the benefits charged to your account, under your state’s formula. Answer state claim notices by their deadline, and pay on time. The Form 940 instructions tie the full FUTA credit to state tax paid on time, so a late SUTA payment can cost you twice.

Software and SUTA

Payroll software can file the quarterly report and pay the tax, on plans whose help pages say so. It uses the rate you enter. It does not open the state account for you unless the plan says it does. Employer payroll taxes percentage adds SUTA to the rest of your share. How much payroll services cost shows what plans charge for a second state.

The methodology page grades how much of the state paperwork software takes off your desk. Gusto is one plain link. Patriot is the other service on this site.