SUI tax rates are about to increase for 2026. Get the details to ensure you are paying the right amount, and you don’t get fined.
It’s critical for every employer to understand how unemployment insurance works and what their unemployment insurance obligation is to ensure compliance with employment and tax laws. There are two mandatory unemployment taxes: state and federal. In this post, we’ll focus on how State Unemployment Insurance tax (SUI) works.
Key takeaways
SUI tax, which stands for State Unemployment Insurance tax, is something most employers with full-time employees have to pay. It’s synonymous with SUTA tax.
Every state has different SUI tax rates that employers are required to pay.
Your specific SUI tax rate depends on a handful of factors, including how long you’ve been an employer, your employees’ earnings, and how many former employees of yours have filed for unemployment benefits.
What is SUI tax?
State Unemployment Insurance tax (SUI) pays stipends to any employee who has lost their job through no fault of their own and is actively seeking new employment. In general, this benefit applies to an employee who experienced a layoff (independent contractors don’t count); it does not typically apply to an employee who voluntarily quit or was fired for misconduct.
SUI tax may be referred to by a few different names; these are:
SUTA (State Unemployment Tax Act) or SUTA tax
Unemployment benefit tax
Reemployment tax
If you hear any of the above, it’s about SUI tax.
When a former employee claims unemployment insurance, they are typically provided with wage replacement pay from the state’s unemployment agency until the former employee has successfully found work or has reached the end of the time period allotted by the state.
You can contest a former employee’s filing for unemployment insurance if you don’t believe they are eligible. Fine print: rules and requirements vary by state, so be sure to review the state laws that apply to your situation.
Is my company required to pay SUI tax? Are employees responsible for paying for it?
If you have full-time employees, you have to pay SUI taxes to fund state unemployment insurance. The Federal Unemployment Tax Act (FUTA) requires it for every state where your company has employees.
In most states, employees are not responsible for funding SUI, and so contributions are not typically withheld from employee wages. However, there are a few exceptions where employees are responsible for making SUI contributions.
These exceptions are:
Alaska
New Jersey
Pennsylvania
What’s the difference between SUI tax (or SUTA tax) and FUTA tax?
SUI tax (aka SUTA tax) and FUTA tax are both unemployment-related payroll taxes.
FUTA is the tax paid by the employer at the federal level; the rate is 6% of an employee’s first $7,000 in taxable wages, but it can be credited by up to 5.4% depending on how much an employer pays in SUI taxes, and whether the state repaid any federal loans related to the state’s unemployment obligation. You can read the fine print regarding the FUTA credit reduction as it relates to SUI on this IRS webpage. In other words, your FUTA could be as low as .06%. To report your FUTA tax, be sure to fill out IRS Form 940.
SUI tax (or SUTA tax) is the unemployment tax that employers (and in the few states named above, employees) pay at the state level. Rates vary for SUI. Keep reading for details.
Where can I find SUI tax (SUTA tax) on a pay stub?
Below is how FUTA and SUI appear on a Gusto pay stub for an employee residing in California; the employer contribution is displayed under “Employer Taxes.”
How do I pay SUI tax?
Typically, employers pay for SUI quarterly through their share of payroll taxes. (Exceptions include New Jersey, Pennsylvania, and Alaska, where a portion of SUI taxes is deducted from the employee’s paycheck.)
To pay FUTA, you must file Form 940 by January 31. If your FUTA tax liability is more than $500 for a calendar year, you also need to make at least one quarterly payment, which you can do through the Electronic Federal Tax Payment System.
Pro tip: before you hire your first employee, check your state’s regulations to be sure that you file your company’s SUI documentation according to your state’s laws.
How much does SUI tax cost?
The short answer: it depends. Your particular SUI tax rate is specific to your business. Every state has a tax rate for new employers, a tax rate range for experienced employers, and a taxable wage base for unemployment tax. Let’s break down these categories:
Annual SUI tax rate: Every state has a different annual SUI tax rate for new employers, ranging from 1% to over 4% in some states.
State tax rate range: These ranges often change annually for each state. Your employer rate also depends on specific individual factors, like your business’s industry, your experience in business, and the number of your former employees who’ve filed for unemployment claims and received unemployment compensation. In New York, for example, the 2026 employer tax rate ranges from 2.1% to 9.9%.
Taxable wage base: You only contribute unemployment tax until your employee earns above that specific amount. For example, if the state wage base is $10,000, but your employee earns $40,000 a year, you’ll only pay SUI taxes on that first $10,000.
Here are the 2025 SUI tax rates by state (most states will release new tax rates for 2026 within the first part of the year).
The Department of Labor (DOL) also has a list of all the states’ contact information for their unemployment agencies, so you can contact them directly for updated information on your rate.
How to get help calculating SUI tax
Calculating SUI tax is a complicated DIY activity, especially if number crunching and compliance checking isn’t your thing. Oh, and the calculation gets trickier if you have employees who work in multiple states. You’ll typically pay SUI to each state where the work is taking place. We recommend touching base with your online payroll service or CPA. You can also get help from your state government by signing up for an SUI tax account.
