![]() Each state has a range of minimum and maximum tax rates for state unemployment taxes. Next, you’ll need to know your state’s SUTA tax rate. For example, California has a taxable wage base of $7,000, while Colorado has a base of $20,4. ![]() Known as the taxable wage base, this is the maximum amount of earnings you can tax in a calendar year for an individual worker.Įach state sets its taxable wage base. To calculate your SUTA tax, you’ll need to know how much of each employee’s wages are subject to the SUTA tax. Currently, two factors determine your SUTA tax: your company’s taxable wage base and SUTA tax rates. While all employers must pay the SUTA tax, the exact amount each company must pay varies. Your state’s labor department will provide guidelines for paying SUTA taxes. The SUTA tax rate companies pay varies depending on the state in which they do business. When you hear of someone collecting unemployment, they are likely drawing from SUTA funds. The fund pays unemployment insurance to employees who become unemployed through no fault of their own, such as through company layoffs. Money from SUTA taxes goes into a state unemployment fund on behalf of that state’s employees. SUTA is a payroll tax employers pay to the state. ![]() Let’s look at exactly how SUTA taxes work, how to figure out your rate, and how to calculate them: How SUTA tax works In most states, SUTA and FUTA do not show up on your employee’s pay stub because you (the employer) pay the full amount. FUTA is for the Federal Unemployment Tax Act that requires payments into the federal uninsurance program. SUTA is the State Unemployment Tax Act, which requires employers to pay unemployment taxes into their respective state’s unemployment program. Businesses have multiple tax obligations and acronyms to keep track of, including SUTA and FUTA taxes. ![]() But most don’t get excited about processing payroll. Most small business owners start their own companies with a passion for a product or service. ![]()
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