What Is SUTA Tax?

by Madison Garcia - Updated September 26, 2017
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Along with Medicare and Social Security taxes, employers must pay unemployment taxes on behalf of employees. Federal unemployment taxes, or FUTA, fund the federal unemployment insurance program. State unemployment taxes, or SUTA, fund a state unemployment benefit program. Most employers pay SUTA taxes on a quarterly basis.

SUTA Basics

Businesses with employees must apply for a state unemployment tax account with their state. After a business applies for an account, the state determines the rate of state unemployment tax the employer must contribute for each employee. Exact rates vary depending on the state, the industry, the length of time the company has been in business and the amount of unemployment claims past employees of the business have filed. In general, a newer business with higher claim rates will pay a higher rate compared with established businesses with fewer historical claims.

About the Author

Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.

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