State Unemployment Insurance (SUI) is a state-specific program that provides temporary financial assistance to eligible workers who have lost their jobs through no fault of their own. This insurance is funded by employer contributions and aims to support individuals while they search for new employment.
Is State Unemployment Insurance (SUI) a payroll tax?
Yes—State Unemployment Insurance tax is considered a payroll tax. Employers are required to pay this tax based on state laws that fall under the State Unemployment Tax Act (which is why SUI is sometimes also called the SUTA tax). SUI is used to fund unemployment benefits for workers.
SUI vs SDI vs TDI
SUI (State Unemployment Insurance), SDI (State Disability Insurance), and TDI (Temporary Disability Insurance) are all state-level programs, but they serve different purposes:
- SUI: Provides temporary financial assistance to unemployed workers.
- SDI: Offers benefits to workers who are unable to work due to a non-work-related illness or injury.
- TDI: Similar to SDI, TDI provides benefits to employees who are temporarily unable to work due to disability.
Who pays for SUI?
SUI is an employer tax, meaning that employers are responsible for paying it. That means this tax is not deducted from employee wages but is instead paid directly by the employer.
How do you pay State Unemployment Insurance?
The exact steps vary a bit depending on the state where your employee is based. But typically, employers need to set up a tax account with the state unemployment agency, obtain an account number, and start regularly submitting payments based on the state's requirements.
How often do you pay SUI?
The frequency of SUI payments varies by state, but most states ask for employers to make payments at least quarterly. It’s up to employers to know the regulations in the states where they hire to make sure they pay SUI correctly and on time.
What other SUI filing requirements are there?
In addition to regular payments, employers must file reports with the correct state agencies detailing employee wages and other relevant information. These filings help determine the employer's contribution rate and help states fund their unemployment insurance programs.
What’s the difference between state unemployment insurance and federal unemployment tax?
State Unemployment Insurance (SUI) and the Federal Unemployment Tax Act (FUTA), a federal law, serve similar purposes but operate at different levels:
- SUI: A state-level tax that funds state unemployment benefits. Tax rates and regulations vary by state.
- FUTA: A federal tax under the Federal Unemployment Tax Act. Employers pay FUTA tax at the federal level to fund the federal portion of unemployment benefits and to assist states with their unemployment programs.
Who qualifies for unemployment benefits?
Different states have different criteria that unemployed workers need to meet to qualify for benefits. Typically, to be eligible for unemployment benefits, workers need to have lost their jobs through no fault of their own and meet the state's requirements for wages earned and time worked.
Where do you find your SUI rates?
Employers can typically find out their SUI rates from their state’s unemployment agency. Rates can be updated (typically annually). The state agency may send out periodic notices when rates are updated, or the new rates may just be posted online.
How to calculate your business’ SUI tax rates
SUI tax rates are calculated based on two main factors: the taxable wage base and the experience rating.
- Taxable wage base: The maximum amount of an employee’s wages that are subject to SUI tax in a calendar year.
- Experience rating: A measure of an employer's history of unemployment claims, which affects their contribution rate. New employers typically start with a standard new employer rate until they establish an experience rating.
Is SUI tax deductible?
Yes, SUI tax is generally deductible as a business expense on federal income tax returns.
Frequently asked questions about SUI
Who qualifies for unemployment benefits?
Unemployed workers who have lost their jobs through no fault of their own and meet state-specific wage and time requirements.
Are employee wages considered when calculating SUI taxes?
Yes, employee wages are used to determine the amount of SUI tax an employer must pay, based on the taxable wage base and the employer’s experience rating.
How do employers manage SUI for employees working in multiple states?
Employers must comply with the SUI requirements of each state where their employees work. This may involve setting up multiple state tax accounts and filing separate reports for each state.
How are unemployment claims processed?
Unemployment claims are processed by state unemployment agencies. Employees file claims with the state where they worked, and the state agency determines eligibility and benefit amounts based on state laws and the claimant's employment history.
What are the current SUI rates by state?
For more information on SUI tax rates and other state and local taxes, see our payroll tax guides for each state:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.