Pennsylvania is one of the few states that require employers and employees to pay state unemployment insurance. Employers need their annual rate and taxable wage base to determine their SUI contributions. Employees need the withholding percentage for the year to figure their contribution. Both can get this information from the Pennsylvania Department of Labor and Industry.
Basic Rate Calculation
An employer must multiply its SUI rate by the annual taxable wage base for each worker. In 2015, the annual taxable wage limit was the first $9,000 paid to each employee. A different rate applied to new employers. In 2015, it was 10.1947 for construction employers and 3.6785 percent for everyone else. For a while, employers are given a standard rate that ranged from 7.4254 percent to 11.4192 percent in 2015. After paying wages for two full years, employers are assigned an experienced rate. These rates represent an employer’s basic amount. They do not include the other components that make up the total SUI rate.
Other SUI Tax Components
An employer’s SUI rate includes a 5.1 percent surcharge as of 2015. An additional contributions tax of 0.65 percent and an interest tax factor of 1.1 percent are also factored into all established employer’s rates. Delinquent employers who fail to comply with payment and filing rules may be assessed a delinquency fee, which is 3 percent more than their regular rate. In the end, an employer’s SUI rate comprises the basic amount, surcharge, and if applicable, additional contributions tax and delinquency increase.
Employee Withholding Rate
As of 2015, all Pennsylvania employees had 0.07 percent of their gross wages withheld for SUI. No annual taxable wage base applied to employees. Employers are responsible for withholding SUI from their employees' paychecks throughout the tax year.
Defining Taxable Wages
In Pennsylvania, some wages are not taxable and should not be included in the annual wage base calculation. For example, it won't cover some benefits under a cafeteria plan, such as disability, death, hospitalization, strike benefits and supplemental unemployment benefits. Other benefits, such as 401(k) and dependent care assistance, are not excluded from Pennsylvania income tax. For a comprehensive list of taxable wages in Pennsylvania, employers may consult the Employer Withholding for Pennsylvania Taxable Compensation Guide. The publication is divided into sections that explain which items are subject to state income tax.
- Pennsylvania Department of Labor: Tax Rates/Contribution Rate Notice
- Pennsylvania Department of Labor: Types of Rates
- Pennsylvania Department of Labor: Yearly Tax Highlights
- Pennsylvania Department of Labor: Calculating Contributions, Penalties and Interest
- Pennsylvania Department of Revenue: IRC Section 125 Cafeteria Plans or Flexible Spending Plans