SUI (State Unemployment Insurance)

State Unemployment Insurance (SUI) is a mandatory payroll tax that employers pay to their state government to fund unemployment benefits for eligible workers who have lost their jobs through no fault of their own. Each state manages its own unemployment insurance program, including the tax rates, wage bases, and qualification criteria. SUI is essential in supporting individuals while they search for new employment and helps stabilize the economy during downturns.

Key Facts

• Employer-Paid: In most states, SUI is paid solely by the employer, though a few states require employee contributions.
• State-Specific Rates: Tax rates and wage bases vary by state and can depend on an employer’s industry and history of claims.
• Experience Rating: Employers with fewer unemployment claims often receive lower tax rates.
• Reporting Requirement: Employers must report wages and pay SUI taxes quarterly to their respective state agencies.
• Supports Job Seekers: The funds collected provide temporary income for workers who meet the state’s eligibility requirements.

1. Who is responsible for paying SUI taxes?

Employers are primarily responsible, but some states (like Alaska, New Jersey, and Pennsylvania) require both employer and employee contributions.

2. How are SUI tax rates determined?

Rates depend on the state, the employer’s industry, and their “experience rating,” which reflects the number and frequency of past unemployment claims.

3. Do SUI taxes vary by state?

Yes, each state sets its own wage base, tax rate schedules, and eligibility requirements for unemployment benefits.

4. How is SUI reported and paid?

Employers file quarterly wage reports and submit payments to their state’s unemployment insurance agency.

5. What happens if an employer doesn’t pay SUI?

They may face penalties, interest on unpaid taxes, and could be restricted from operating in that state until they are compliant.