As an employer, one of your responsibilities is withholding and paying certain taxes, like SUTA tax. But if you’re a new employer, this process can be a bit confusing at first. Read on to learn what the SUTA tax requirements are in your state.
SUTA tax overview
Before you dive into the SUTA tax requirements for your business, let’s briefly recap what SUTA tax is…
The State Unemployment Tax Act (SUTA) tax (also called SUI, state unemployment insurance, or reemployment tax) is a type of payroll tax that employers must pay to the state. States use funds from SUTA tax to pay unemployment benefits to unemployed workers.
For the majority of states, SUTA tax is an employer-only tax. However, there are three states that require employees to also pay SUI tax: Alaska, New Jersey, and Pennsylvania.
Depending on your type of business, you may be exempt from paying SUTA tax. Certain organizations, such as nonprofits and businesses with few employees, may be exempt from paying state unemployment taxes.
When it comes to SUTA tax, employers should know about the SUTA tax wage base and state unemployment tax rates. Each state sets a SUTA tax wage base for employers (aka the maximum amount of an employee’s income that can be taxed). And, the wage base typically changes from year to year. SUTA tax rates vary depending on the state your business is in (or the state your employees work, if different). Each state has its own range of rates. Your state typically tells you what your SUTA tax rate is when you register as an employer.
SUTA tax requirements by state
Whether or not you’re liable to withhold SUTA tax depends on a couple of factors. These factors typically include things like the number of employees and the amount of wages paid to employees during the quarter (aka threshold).
Use this state-by-state guide to find out if your business is liable for state unemployment taxes as well as your employer registration requirements, state contact information, and more.
Business employers are subject to SUTA tax if they: Employ one or more workers on at least one day in 20 or more different weeks during the current or preceding calendar year (weeks don’t have to be consecutive) Paid wages of $1,500 or more in any calendar quarter during the current or preceding calendar year. Domestic employers must pay SUTA tax if the employer pays domestic workers in a private household, college club, fraternity, or sorority house a total of $1,000 or more in cash wages in any calendar quarter during the current or preceding calendar year. Agricultural employers are subject to SUTA tax if one of the following is true: The employer employs 10 or more agricultural workers in 20 or more different weeks during the current or preceding calendar year OR Has paid a total of $20,000 or more in wages to agricultural workers during any calendar quarter of the current or preceding calendar year.
Employer registration requirements: Register with the state after the liability is met.
Timeline for receiving unemployment tax number: You can receive your SUTA tax number the same day if you e-File. The wait time for receiving your tax number via mail is three – four weeks.
Alabama Department of Labor