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State Unemployment Insurance Taxes

All states have a State Unemployment Insurance (SUI) tax. Unemployment tax rates vary from state to state.

In order to be taxed at the correct rate and in the correct state (especially in the case of remote employees) companies must register with unemployment agencies in each state where at least one employee works,

In most cases, each state defines minimum, maximum, and new employer rates.

  • The new employer rate, which is assigned to companies who have recently registered as a new employer in that state, falls between the minimum and maximum rate, but will likely be relatively high (i.e., closer to the maximum rate).
  • Existing employers will have a rate that falls somewhere between the minimum and maximum rates.
  • Each year, an existing company's experience rating will be reassessed, and consequently their SUI rate may increase or decrease.

Unlike Federal Unemployment taxes for which most companies receive a credit (and thus pay comparatively little), SUI rates can be quite high.

  • Each state may also have a different wage base, which is the portion of an employee's total wages that are subject to unemployment taxes.
  • Some states assign base rates to companies in particular industries. For example, Massachusetts assigns a new company rate to construction companies that is higher than the rate for other types of employers.
  • Wage bases range from a little more than the Federal wage base of $ 7 ,000 to the equivalent of some employees' salaries.

If you are using Zenefits Payroll, are marked Full Service for the unemployment jurisdiction in each state, and have provided us with account numbers and rates, we'll handle the filing for you.

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