What is SUTA Tax?

This article deconstructs the State Unemployment Tax Act (SUTA) to help you understand payroll duties. It seeks to provide complete understanding to employers, whether managing in-house or outsourced, by covering its objective, employer liability, calculation elements, and the filing/payment method.
what is SUTA Tax
What is SUTA Tax?
Understanding the State Unemployment Tax Act (SUTA) is essential for navigating payroll complications, including its purpose, obligation, computation, and filing procedures, whether you are self-managing or utilizing an outsourced agency.
In this article

A significant part of managing employees is managing payroll, including withholding taxes, especially state unemployment taxes. Managing your team’s payroll is crucial, especially if you are using an outsourced payroll provider. It’s critical to understand the unemployment tax in your state, whether you handle it yourself or hire an outsourced payroll provider. So, what is SUTA Tax? Let us learn more about it in detail.

What is the SUTA Tax?

The State Unemployment Tax Act refers to the payroll tax for state unemployment benefits. SUTA tax is one of the most common names for this tax, but it may also go by other names depending on your state.

  • State unemployment insurance (SUI)
  • Reemployment tax
  • Employment security tax

Purpose of SUTA Tax

States require employers to pay the State Unemployment Tax Act (SUTA) tax as a type of payroll tax. Unemployment insurance benefits are paid out by states using funds generated by the State Unemployment Tax Act (SUTA). The SUTA tax funds the state’s unemployment insurance to pay for the benefits paid to unemployed and displaced workers.

Employer Liability for SUTA Tax

Most states have SUTA taxes as an employer-only tax, but Alaska, New Jersey, and Pennsylvania also require employees to pay SUI taxes. Employers should be aware of the SUTA tax wage base and unemployment tax rates when it comes to SUTA tax. The number of employees and wage paid to employees during the quarter determine whether you are liable for withholding SUTA tax.

Who Pays SUTA Tax?

Employers usually pay SUTA tax. Alaska, New Jersey, and Pennsylvania are the only states requiring employees to pay unemployment taxes. Businesses with employees in these three states must withhold the tax from their employee’s wages and deliver it to the state.

How Is SUTA Calculated?

Your state’s new employer tax rate multiplied by the wage base is how you calculate the SUTA tax. Using the same formula, multiply the tax rate by the taxable wage base for businesses assigned an established business tax rate.

Factors Affecting SUTA Tax Rate

Factors affecting SUTA tax rates include:

New Employers

Business age plays an important role when it comes to SUTA tax rates. New employers will need more employment history to qualify for the top rate based on turnover or unemployment claims.

Employer’s Industry

State unemployment insurance policies may also be based on a business industry. For instance, the construction industry sees a high turnover rate (and, therefore, more unemployment insurance claims).

History of Turnover/Unemployment Claims

The SUTA tax rate will depend on how many unemployment claims have been filed by former employees in the last years, as well as the turnover history of the business.

How To File and Pay SUTA Taxes

There are certain essential items nearly all states require when setting up a state unemployment tax account and registering as a new employer, including:

An employer identification number (EIN)

A business’ EIN enables the IRS to identify it on tax returns.

EFTPS or Enrollment in the Electronic Federal Tax Payment System 

EFTPS allows employers to pay employment taxes online or by phone.

A New-Hire Reporting Account

Information obtained from this system can be used to collect child support, identify fraudulent unemployment insurance recipients, and prevent unethical welfare assistance.

Proof of Workers’ Compensation Insurance

The goal of workers’ compensation insurance is to give wage protection and medical benefits to employees who have been injured at work.

Employers are accountable for reporting their SUTA tax liability to their respective states and making payments to the state.

  • Register with your state’s unemployment insurance department. 
  • Report wages monthly.
  • Calculate your quarterly SUTA tax due.
  • Pay SUTA tax quarterly. 

SUTA taxes must be paid, returns must be filed once registered with your state, and your employer tax number is received. Your state will determine the exact filing and payment requirements, but most states require you to file a yearly return and pay quarterly. 


Hiring a new employee is an exciting and vital step in the startup life cycle. However, as a new employer, you must pay SUTA taxes. Although the tax can seem daunting, it is part of the regular payroll process for businesses of all sizes. Compliance with your SUTA requirements will be easier if you stay informed of your state’s rules and regulations. Check out Beem Tax Calculator to get a quick and accurate estimate of your federal and state tax refund.


What does SUTA mean?

SUTA stands for the State Unemployment Tax Act. The SUTA tax is a required payroll tax that all employers must pay, and the money goes into the state unemployment fund.

Is SUTA payable a liability?

SUTA Payable is classified as part of current liabilities.

How much is SUTA in Texas?

The tax rates for experienced employers range from 0.23% to 6.23%, including a 0.13% replenishment tax and a 0.1% employment training and investment assessment.

Is SUTA payable by debit or credit?

When SUTA is recognized during a pay period, it is included as a debit with payroll expenditures, and the amount payable is credited to SUTA Payable.

Was this helpful?

Did you like the post or would you like to give some feedback? Let us know your opinion by clicking one of the buttons below!

Team Beem

Team Beem

Team Beem brings you the latest in the world of personal finance to you. From tips and tricks on how to manage money to how to get cash for emergencies, Beem is your destination for all the information you need to be smart about your money.

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

Related Posts

Do Homeless People Pay Taxes
Do Homeless People Pay Taxes?
Being homeless is a complicated problem that affects a huge number of people all over the United States. Some of them pay taxes, but not all do. Here's a detailed guide to help through paying taxes for homeless people.
List of Tax Deductions for Lawn Care Business [2024]
Do Nursing Home Residents on Medicaid Need to File Income Taxes?
Do Nursing Home Residents on Medicaid Need to File Income Taxes?
Low-income people obtain health insurance through Medicaid. If you are covered under this program, you may not have to file income taxes if your income is below the filing threshold. Let's read on to know more!
Taxes on game show winnings and prizes: How much tax you have to pay?
Winning at least $600 is likely to result in a 1099-MISC tax form being sent by the awarding entity to both the winner and the IRS. If no form is received, the winner is still obligated to report the winnings value.
60000 after tax
60k a year is how much a month/week/hour after taxes?
If you earn a yearly salary of $60,000, it is crucial to know the amount of income tax you are obligated to pay. Planning ahead and determining the income tax rate on a salary of $60,000 per year can help you efficiently navigate the tax filing process. Calculating how much you owe can be a daunting task, but our blog provides a useful breakdown to help you determine the amount of tax you need to pay this year.
W2 Form 2024: Everything You Need to Know
The IRS requires employers to send their employees a copy of their W-2 form by January 31 or face penalties. Even if you have quit your job, your last employer can send you a W-2 by  January 31 or earlier, in which case the employer has 30 days to provide it.

Get up to $1,000 for emergencies

Send money to anyone in the US

Ger personalized financial insights

Monitor and grow credit score

Get up to 20% on everyday spends

Save up to 40% on car insurance

Get up to $1,000 for loss of income

Insure up to $1 Million

Coming Soon

File federal and state taxes at low cost

Quick estimate of your tax returns

Get up to $1,000 for emergencies

Send money to anyone in the US

Save big on auto insurance - compare quotes now!

Zip Code:
Zip Code: