What is the State Unemployment Tax Act (SUTA)?

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What is the State Unemployment Tax Act (SUTA)?

Posted By Emily Clarke     November 3, 2021    


Payroll tax employers need to be aware of SUTA, also known as the State Unemployment Tax Act. All payroll tax employers are required to pay this tax. Here is some more information on the State Unemployment Tax Act.

What is SUTA For?

The State Unemployment Tax Act is a tax that goes straight to the state unemployment fund. The funds deposited are then used to provide financial support to displaced workers in the state while they search for new opportunities.

Who Pays the State Unemployment Tax Act?

It depends on the state. As mentioned, all payroll tax employers must pay into it. In some states, the tax is also taken out of employees' taxable income.

What is the State Unemployment Tax Rate?

This rate is also situational. Each state has their own rate and each state has their own taxable wage base. Employers are given an assessment that outlines their rate, so they know exactly what they’re required to pay into the fund. If an industry is known for high turnover rates, they may be subject to higher taxes under the State Unemployment Tax Act.

These aren’t the only factors that can determine the rate of a business’s state unemployment tax. These factors include how many former employees of a business have filed unemployment, the age of a business, their standing and account status, and more. These rates are not necessarily static on a standard state-wide basis either, as states can opt to change the rate on an annual basis, based on unemployment rates and needs of the market.

What Happens if You Don’t Pay SUTA or Aren’t Compliant

Neglecting to pay SUTA or committing compliance errors can cause an employer to be subject to fines and penalties. Criminal penalties can also be filed in more severe breaches. Find the best suta compliance software by visiting this website.

Use SUTA Compliance Software

If you want to avoid SUTA penalties and ensure you’re paying the proper rate without worrying, then SUTA compliance software is your solution. SUTA compliance software can automate your tax rate changes, help you manage unemployment claims, and much more. With SUTA compliance software, you’ll never have to worry about SUTA penalties and fines again.

Read a similar article about benefits administration software here at this page.