SUTA tax: what it means and how much it costs

By the HRPricing editorial teamReviewed October 18, 2026How we research and score

SUTA means State Unemployment Tax Act: the unemployment insurance tax each state charges employers on every worker's wages up to a state wage base, which in 2026 runs from $7,000 in California to $78,200 in Washington (state agencies, checked October 2026). Your rate depends on your layoff history, and new employers get a set starting rate.

SUTA is the state unemployment insurance tax an employer pays on each employee's wages up to the state's taxable wage base, at a rate the state assigns.

On this page
  1. What SUTA costs for a $50,000 employee
  2. How your SUTA rate is set
  3. Who pays SUTA
  4. SUTA with a PEO

What SUTA costs for a $50,000 employee

New employer SUTA on one $50,000 employee, 2026
StateWage baseNew employer rateEmployer cost
California$7,0003.4%$238 (plus $7 ETT)
Texas$9,0002.7%$243
Pennsylvania$10,0003.822%$382.20
New York$17,6004.1%$721.60
New Jersey$44,8002.8%$1,254.40
Alaska$54,2001.00%$500

Source: CA EDD, Texas Workforce Commission, PA Department of Labor and Industry, NY DOL and US DOL Significant Provisions (July 2026), NJ Department of Labor, Alaska Department of Labor. Checked October 2026.

The math is the lower of the salary or the wage base, times the rate. New Jersey costs more than California here because its wage base is more than six times higher. All 50 states and DC are in our 2026 SUTA rates table.

How your SUTA rate is set

New employers get a starting rate. In some states it depends on industry (Montana, for example); in California the new employer rate of 3.4% lasts two to three years. After that, states use experience rating: the more former employees who collect unemployment benefits charged to your account, the higher your rate. Ranges are wide. Texas runs from 0.32% to 6.32% in 2026 and California from 1.5% to 6.2%. The state tells you your new rate each year: Texas, for example, computes rates on October 1 and sends notices in December.

Paying SUTA on time also matters federally. It earns the 5.4% credit that cuts FUTA from 6.0% to 0.6% (US DOL).

Who pays SUTA

In most states only the employer pays. A few states also take a worker share through payroll: Alaska withholds 0.50% from employees on the same $54,200 base, New Jersey withholds 0.3825% for unemployment plus 0.0425% for workforce funds on $44,800, and Pennsylvania withholds 0.07% on all wages. Those lines show on the employee's pay stub.

You register with the state agency before or soon after your first payroll. California, for example, requires it within 15 days after you pay more than $100 in wages in a quarter (EDD).

SUTA with a PEO

A PEO invoice usually carries a SUTA line. Ask the PEO in writing whose state account the wages are reported under and what rate it charges, then compare that with your own state rate notice. Buyers also report PEO fees folded into other invoice lines: an October 2026 Trustpilot review describes ADP bundling fees into its admin and workers' comp charges. See what a PEO costs per employee and the payroll taxes guide for the full employer tax picture.

Frequently asked questions

What is SUTA?
SUTA is the state unemployment tax employers pay to fund unemployment benefits. Each state sets a taxable wage base and assigns each employer a rate. In 2026 the wage base ranges from $7,000 (California) to $78,200 (Washington), per the state agencies.
What does SUTA mean?
SUTA stands for State Unemployment Tax Act. Payroll providers also call it SUI (state unemployment insurance). It is the state counterpart of FUTA, the federal unemployment tax.
How is the SUTA tax calculated?
Multiply the lower of the employee's yearly wages or the state wage base by your assigned rate. A new Texas employer pays $9,000 x 2.7% = $243 per employee earning $9,000 or more in 2026, per the Texas Workforce Commission.
Do employees pay SUTA?
In most states, no. Alaska (0.50%), New Jersey (0.3825% plus 0.0425%) and Pennsylvania (0.07% on all wages) withhold a worker share, according to their 2026 state agency rate pages.
What is a good SUTA rate?
There is no single good rate because ranges differ by state. In Texas 2026 rates run from 0.32% to 6.32%; in California from 1.5% to 6.2%. A rate near your state's minimum means few benefit charges against your account.
Sources (11)
  1. US Department of Labor, ETA: Unemployment insurance tax topic (checked Oct 18, 2026)
  2. US Department of Labor, ETA: Significant Provisions of State UI Laws, July 2026 (checked Oct 16, 2026)
  3. California EDD: Rates and withholding (checked Oct 16, 2026)
  4. California EDD: Am I required to register as an employer? (checked Oct 16, 2026)
  5. Texas Workforce Commission: Unemployment tax rates (checked Oct 16, 2026)
  6. Pennsylvania Department of Labor and Industry: UC tax yearly highlights (checked Oct 16, 2026)
  7. New York State DOL: Unemployment insurance rate information (checked Oct 16, 2026)
  8. New Jersey Department of Labor: Employer rate information (checked Oct 16, 2026)
  9. Alaska Department of Labor: 2026 experience rates (checked Oct 16, 2026)
  10. Washington Employment Security Department: Employer tax handbook (checked Oct 16, 2026)
  11. Trustpilot: ADP reviews (Oct 1, 2026 review on fees bundled into admin and workers comp) (checked Oct 16, 2026)

This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.