SUTA
State unemployment tax. The employer pays it on each employee's wages up to the state's wage base, at a rate the state sets.
SUTA is shorthand for state unemployment tax. Every state runs its own unemployment insurance program and charges employers for it, each with its own wage base and rates.
New employers usually start at a set rate, then move to a rate based on how many former employees have claimed benefits. Two examples for 2026:
- California's EDD taxes the first $7,000 of wages and gives new employers 3.4% for two to three years, or $238 per employee.
- The Texas Workforce Commission taxes the first $9,000 at a 2.7% entry rate, $243 per employee.
Paying SUTA on time is what earns the 5.4% credit against federal FUTA tax.
For an S corp owner, SUTA is one of the payroll costs the election adds, along with quarterly wage reports to the state. A sole proprietor, or a default single-member LLC with no employees, doesn't pay it. Some states also take disability or paid leave contributions from wages. California withholds 1.3% for SDI.