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What is SUTA Tax?
SUTA is short for State Unemployment Tax Act. This tax is a payroll tax that businesses must pay to fund unemployment benefits. These benefits are provided to qualifying employees by the state to assist in compensation for loss in employment.
For an employee to receive unemployment benefits through the state they must be eligible. An employee may not be eligible if they:
- Are able but not willing to work
- Voluntarily leave their job without just cause
- Are terminated due to performance issues
- Not in compliance with company policies and received numerous violations
Eligible employees will receive a percentage of the wages they would have received if still employed until they have exhausted their benefit or they find employment.
While SUTA is generally an employer tax, there are three states that also require employees to pay state unemployment taxes. These are:
- Alaska
- New Jersey
- Pennsylvania
In these states, you would need to withhold SUTA tax from employees’ wages and remit it to the state in combination with the employer portion of taxation.
When is SUTA Tax due?
First Quarter: April 30th
Second Quarter: July 31st
Third Quarter: October 31st
Fourth Quarter: January 31st
How to Calculate the Amount of SUTA Tax Owed
A company is subject to SUTA taxes up to the wage base paid to each employee. In order to calculate the tax liability, you would use the assigned tax rate multiple times the wages paid- up to the wage base. Once an employee reaches the wage base, the company is no longer liable for the tax.
For Example:
Company ABC is headquartered in VA and has two employees.
VA wage base is: $8,000
VA Starting Rate: 2.5%
| Employer: Company ABC | EIN: 99-9999999 |
|||
|---|---|---|---|---|
| First Quarter | Second Quarter | |||
| John Smith | Jesse Black | John Smith | Jesse Black | |
| Gross Wages |
$10,000 | $5,000 | $9,500 | $5,500 |
| Taxable Wages | $8,000 | $5,000 | $0.00 | $3,000 |
| Tax Due | $200 (8000*.025) | $125 (5000*.025) | $0.00 | $75 (3000*.025) |
SUTA Liability = (Employee A’s Eligible Wages + Employee B’s Eligible Wages) * .025
SUTA Liability = ($8,000 + $5,000) * 2.5%
SUTA Tax Rate and Wage base Limit by State For 2022
If you’re thinking of starting a business, you’ll need to know about SUTA taxes. SUTA, or the State Unemployment Tax Act, is a tax that employers pay on employee wages. The amount of the tax is based on the employee’s wages and the state’s unemployment rate. Each state has its own limit for the wage base subject to SUTA taxes. Below is a chart with the current wage base and starting rates for each respective state.
| State | SUI New Employer Tax Rate | Tax Rate Range for Experienced Employer | State Wage Base Limit |
|---|---|---|---|
| Alabama | 2.70% | 0.65% – 6.8% | $8,000 |
| Alaska | 1.28% | 1.00% – 5.4% | $45,700 |
| Arizona | 2.00% | 0.08% – 20.6% | $7,000 |
| Arkansas | 3.10% | 0.3% – 14% | $10,000 |
| California | 3.40% | 1.5% – 6.2% | $7,000 |
| Colorado | 1.7% to 7.74% | 0.71% – 9.64% | $17,000 |
| Connecticut | 3.00% | 1.9% – 6.8% | $15,000 |
| Delaware | 1.8% to 2.3% | 0.3% – 8.2% | $16,500 |
| D.C. | 2.70% | 1.6% – 7% | $9,000 |
| Florida | 2.70% | 0.1% – 5.4% | $7,000 |
| Georgia | 2.70% | 0.4% – 8.10% | $9,500 |
| Hawaii | 5.20% | 0.01% – 6.6% | $47,400 |
| Idaho | 1% | 0.207% – 5.4% | $44,400 |
| Illinois | 3.18% | 0.675% – 6.875% | $12,960 |
| Indiana | 2.50% | 0.5% – 7.4% | $9,500 |
| Iowa | 1.00% | 0% – 7.5% | $34,800 |
| Kansas | 2.70% | 0.20% – 7.6% | $14,000 |
| Kentucky | 2.70% | 0.3% – 9.0% | $11,100 |
| Louisiana | Varies | 0.09% – 6.2% | $7,700 |
| Maine | 2.31% | 0.69% – 6.01% | $12,000 |
| Maryland | 2.60% | 2.2% – 13.5% | $8,500 |
| Massachusetts | 2.42% | 0.94% – 14.37% | $15,000 |
| Michigan | 2.70% | 0.06% – 10.3% | $9,500 |
| Minnesota | Varies | 0.20% – 8.90% | $36,000 |
| Mississippi | 1.00% | 0.0% – 5.4% | $14,000 |
| Missouri | 2.376% | 0% – 5.4% | $11,000 |
| Montana | 1% to 2.4% | 0% – 6.12% | $38,100 |
| Nebraska | 1.25% | 0% – 5.4% | $9,000 |
| Nevada | 2.95% | 0.25% – 5.4% | $36,600 |
| New Hampshire | 1.20% | 0.1% – 7% | $14,000 |
| New Jersey | 2.80% | 0.4% – 5.4% | $39,800 |
| New Mexico | 0.33% to 5.4% | 0.33% – 6.4% | $28,700 |
| New York | 2.50% | 0.6% – 7.9% | $12,800 |
| North Carolina | 1.00% | 0.06% – 5.76% | $28,000 |
| North Dakota | 1.02% | 0.08% – 9.69% | $39,100 |
| Ohio | 2.70% | 0.3% – 9.4% | $9,000 |
| Oklahoma | 1.50% | 0.1% – 5.5% | $24,800 |
| Oregon | 2.60% | 1.2% – 5.4% | $47,700 |
| Pennsylvania | 3.69% | 1.2905% – 9.9333% | $10,000 |
| Rhode Island | 1.16% | 0.9% – 9.4% | $26,700 |
| South Carolina | 1.03% | 0.06% – 5.46% | $14,000 |
| South Dakota | 1.20% | 0% – 9.35% | $15,000 |
| Tennessee | 2.70% | 0.01% – 10% | $7,000 |
| Texas | 2.70% | 0.31% – 6.31% | $9,000 |
| Utah | Varies | 0.1% – 7.2% | $41,600 |
| Vermont | 1.00% | 0.2% – 7.2% | $14,100 |
| Virginia | 2.50% | 0.11% – 6.2% | $8,000 |
| Washington | Varies | 0.13% – 5.72% | $62,500 |
| West Virginia | 2.70% | 1.5% – 12% | $12,000 |
| Wisconsin | 3.05% - 3.25% | 0% – 12% | $14,000 |
| Wyoming | 1.22% | 0.18% – 8.72% | $28,200 |
Recommended Reading: FUTA Tax: How to Calculate and Understand Employer’s Obligations
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How to best manage your SUTA Tax requirements?
While you enjoy running and growing your business, chances are you do not enjoy worrying about SUTA, FUTA and other payroll taxes. Payroll taxes are complicated and if not done right, you may be looking at steep penalties and fines. Don’t let the stress of figuring out how to calculate and remit unemployment taxes get in the way of what you want to be doing – running your business. UZIO’s software accurately calculates your tax liability for you and feeds directly into a tax system that our tax experts utilize in filing your payroll taxes on your behalf. Get your demo today and let us ease the burden for you!
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