State Unemployment Tax Act (SUTA)

What is SUTA Tax?

State Unemployment Tax Act, or SUTA, is a type of payroll tax that employers are required to pay to their state unemployment fund for their employees.

If you ever have to collect unemployment, you would collect payments from SUTA funds.

How Do You Calculate SUTA Tax?

Every employer will be given an assessment and SUTA rate specific to them that they have to pay. The rate that employers pay can differ from year to year – you may also find that it gets updated from time to time.

Every state determines its own SUTA rate, so calculations are different across the country. But let’s say you had a taxable base wage rate of $10,000 and a SUTA tax rate of 3%. The first $10,000 of an employee’s wages would be taxed at 3% for SUTA.

What Is the SUTA Rate?

As mentioned earlier, every state has its own tax rate. There is no single SUTA rate across the board.

The SUTA rate is usually determined by a couple of factors. The state will assign the rate based on how long a business has been an employer – generally, more experienced employers are considered better employers. They’re therefore likely to see their rate go down as time passes.

The rate is often adjusted by the employer’s industry. Higher turnover industries may have higher SUTA rates.

Is It Always Called the SUTA Rate?

As SUTA is implemented on a state by state basis, it can sometimes be called something else. In Florida, it’s called Reemployment Tax, and in some other states, it’s referred to as SUI.

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See our full list of over 50 Small Business Terms here. 

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