SUTA is state unemployment tax, named after each state’s State Unemployment Tax Act. Employers pay it to their state to fund unemployment benefits for people who lose their jobs. You multiply your state-assigned rate by each employee’s wages up to the state’s wage base, a yearly cap that ranges from $7,000 to $78,200 in 2026.
Payroll software and state agencies also call it SUI, state unemployment insurance, or simply UI tax. In almost every state only the employer pays it. Workers are taxed for unemployment only in Alaska, New Jersey and Pennsylvania.
How SUTA works
Every state runs its own unemployment insurance program inside a federal framework. The state collects the tax, keeps it in its account in the federal Unemployment Trust Fund, and pays benefits from it. The federal side, FUTA, mostly pays for running those programs and for loans to states that run short.
Three numbers decide what you owe:
- The wage base. The first part of each employee’s pay in the calendar year that is taxed. Wages above it are not.
- Your rate. A percentage the state assigns your business each year, based on its history.
- Who you employ. Each state decides which workers and which pay its law covers.
Most states collect the tax quarterly, with a wage report, under a state unemployment account number. A new employer registers with the state agency once it meets the state’s coverage rule, which is often the same as the federal test of $1,500 in wages in a quarter or a worker in 20 weeks.
SUTA wage base by state for 2026
No two states set the same cap. The figures below are from the U.S. Department of Labor’s summary of state laws in effect in July 2026, covering 53 programs: the 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
| State | Wage base | Against FUTA's $7,000 |
|---|---|---|
| Washington | $78,200 | 11.2x |
| Hawaii | $64,500 | 9.2x |
| Idaho | $58,300 | 8.3x |
| Oregon | $56,700 | 8.1x |
| Alaska | $54,200 | 7.7x |
| Utah | $50,700 | 7.2x |
| Montana | $47,300 | 6.8x |
| North Dakota | $46,600 | 6.7x |
| Nevada | $45,400 | 6.5x |
| New Jersey | $44,800 | 6.4x |
| Minnesota | $44,000 | 6.3x |
| New Mexico | $34,800 | 5.0x |
| North Carolina | $34,200 | 4.9x |
| Wyoming | $33,800 | 4.8x |
| U.S. Virgin Islands | $32,100 | 4.6x |
| Rhode Island | $30,800 $32,300 for high tax group employers | 4.4x |
| Colorado | $30,600 | 4.4x |
| Connecticut | $27,000 | 3.9x |
| Oklahoma | $25,000 | 3.6x |
| Iowa | $20,400 | 2.9x |
| New York | $17,600 | 2.5x |
| Vermont | $15,400 | 2.2x |
| Kansas | $15,100 | 2.2x |
| Massachusetts | $15,000 | 2.1x |
| South Dakota | $15,000 | 2.1x |
| Delaware | $14,500 | 2.1x |
| Illinois | $14,250 | 2.0x |
| Mississippi | $14,000 | 2.0x |
| New Hampshire | $14,000 | 2.0x |
| South Carolina | $14,000 | 2.0x |
| Wisconsin | $14,000 | 2.0x |
| Kentucky | $12,000 | 1.7x |
| Maine | $12,000 | 1.7x |
| Pennsylvania | $10,000 | 1.4x |
| Georgia | $9,500 | 1.4x |
| Indiana | $9,500 | 1.4x |
| West Virginia | $9,500 | 1.4x |
| District of Columbia | $9,000 | 1.3x |
| Michigan | $9,000 $9,500 for delinquent employers | 1.3x |
| Missouri | $9,000 | 1.3x |
| Nebraska | $9,000 $24,000 for high tax group employers | 1.3x |
| Ohio | $9,000 | 1.3x |
| Texas | $9,000 | 1.3x |
| Maryland | $8,500 | 1.2x |
| Alabama | $8,000 | 1.1x |
| Arizona | $8,000 | 1.1x |
| Virginia | $8,000 | 1.1x |
| Arkansas | $7,000 | Same |
| California | $7,000 | Same |
| Florida | $7,000 | Same |
| Louisiana | $7,000 | Same |
| Puerto Rico | $7,000 | Same |
| Tennessee | $7,000 | Same |
Washington taxes the most pay per worker, at $78,200. At the other end, 6 programs stop at $7,000, the same as the federal FUTA base. No state’s base is lower than the federal one.
Some states tie their base to average wages, so it rises most years. Check your state’s notice each January before setting up payroll for the year.
How to calculate SUTA tax
For each employee, take the wages paid in the year until they reach your state’s base, then multiply by your rate. Once someone passes the base, you stop paying SUTA on them until January. That is why the tax is heavy early in the year and light toward the end.
Here is one employee, paid the same salary in four different states, by a business new enough to pay each state’s starting rate:
| State | Wage base | New employer rate | SUTA for the year |
|---|---|---|---|
| Florida | $7,000 | 2.7% range 0.1% to 5.4% | $189.00 |
| Texas | $9,000 | 2.7% range 0% to 6% | $243.00 |
| New York | $17,600 | 4.025% range 2.025% to 9.825% | $708.40 |
| New Jersey | $44,800 | 2.8% range 0.5% to 5.8% | $1,254.40 |
The rate is not what separates them most. New York’s starting rate is the highest of the four, yet New Jersey’s bill is far larger because its base is more than twice New York’s. In Florida, the base is so low that SUTA is finished early in the year.
The rates in the example are the base new employer rates from the same Department of Labor table. Some states start certain industries on a higher rate, so use the rate on your own notice.
How your SUTA rate is set
Every state sets each employer’s rate by experience. A business whose former employees draw a lot of benefits pays more; one with few claims pays less. New businesses pay a new employer rate until they have built enough history to be rated.
States send each employer a rate notice, normally once a year. New Hampshire, New Jersey and Vermont work on a rate year starting July 1; the rest follow the calendar year. Every state can assign a rate of 5.4% or more to its highest-cost employers.
About half the states let an employer make a voluntary contribution to its account to qualify for a lower rate. It only pays off when the saving is bigger than the contribution, and the voluntary payment does not count toward your FUTA credit.
Nonprofits, state and local governments and federally recognized tribes have one more choice. Federal law lets them reimburse the state for benefits actually paid to their former workers instead of paying the tax.
How SUTA lowers your FUTA
The two taxes are linked. FUTA is 6% of the first $7,000 per employee, but paying your state tax earns a credit of up to 5.4%. Most employers end up paying 0.6% federally, at most $42 per employee.
The credit has a deadline. State tax paid after the Form 940 due date, February 1, 2027 for 2026, earns only 90% of its credit, and unpaid state tax earns none. Employers in a state still repaying federal loans get a smaller credit as well; see what is FUTA for the current list.
The annual Form 940 is where all of this comes together: the state you paid, whether any state tax was late, and the credit that results.
Do employees pay SUTA?
Only in three states. Alaska, New Jersey and Pennsylvania take a small unemployment contribution out of workers’ pay, and the employer sends it to the state with its own tax. Pennsylvania figures the employee share on all wages; the other two use the same base as employers.
Anywhere else, unemployment tax should not reduce take-home pay. If a pay stub from Florida, Texas or another state shows a SUTA line, check whether it is listed with the employee’s deductions. It is usually the employer’s cost shown for information, as some payroll systems do.
Unemployment tax is separate from FICA, the Social Security and Medicare tax that employees and employers both pay. Several states also run disability or family leave programs funded from paychecks, which can look like unemployment tax on a stub but are not.
Who is exempt from SUTA
Coverage is set state by state, but a few groups are commonly left out:
- Independent contractors. Pay reported on a 1099 is not wages. A state can still decide a worker is really an employee and bill you, so classify carefully; see W-2 vs 1099.
- Some family employment. Federal unemployment tax leaves out a child under 21 working for a parent, and many states do the same.
- Reimbursing employers, the nonprofits and public bodies described above, which pay for actual benefits instead.
Corporate officers, agricultural workers and household employees are treated differently from state to state. Your state agency’s employer handbook lists exactly who counts.
What is SUTA dumping?
SUTA dumping is manipulating ownership to escape a high unemployment tax rate. The Department of Labor describes two forms. One buys a shell company that already has a low rate. The other sets up new companies, builds each a low rate with a few workers, then moves the main payroll into one of them.
The Department of Labor has pressed states to close these loopholes because other employers end up paying for the lost tax. The ordinary version of the problem is innocent: buying a business can bring its unemployment history with it, so ask the state what rate transfers before you close.
The payroll register template has room for each employee’s year-to-date wages, which is the figure you need to know when someone reaches your state’s base.
Sources: U.S. Department of Labor, Significant Provisions of State Unemployment Insurance Laws, effective July 2026, Comparison of State UI Laws: Financing, UI tax topic and UIPL 34-02 on SUTA dumping; IRS 2026 Instructions for Form 940 (draft). Checked October 24, 2026.
