Glossary
Payroll

State Unemployment Tax

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

State Unemployment Tax is a payroll tax paid by employers to fund state unemployment insurance programs for eligible workers.
State Unemployment Tax (SUTA or SUI) is a payroll tax that employers are required to pay to their state government in order to fund unemployment insurance programs. These programs provide temporary financial assistance to workers who lose their jobs through no fault of their own. The tax rate and wage base for SUTA vary by state and may be influenced by an employer’s history of unemployment claims. Employers must report and remit these taxes regularly, usually quarterly, and comply with state-specific requirements. Nonprofits may have special options, such as reimbursing the state for claims instead of paying the traditional tax. Keeping accurate payroll records is essential for compliance and proper calculation of SUTA liabilities.

Key Takeaways

  • State Unemployment Tax is required for most employers.
  • Rates and wage bases vary by state and employer history.
  • Accurate payroll records are necessary for compliance.

Why It Matters

SUTA compliance is crucial to avoid penalties and support unemployment benefits for former employees.

Real World Example

A nonprofit organization in California employs five staff members. Each quarter, the organization calculates its State Unemployment Tax (SUTA) liability based on the state’s current wage base and its specific tax rate, which is influenced by its history of unemployment claims. After calculating the total due, the nonprofit files a payroll tax return and submits payment to the state. If a former employee later files for unemployment and is eligible, the state uses these funds to provide temporary financial assistance. The nonprofit must ensure accuracy in its payroll records to avoid penalties and remain compliant with California’s SUTA requirements.

How Aplos Helps

Aplos streamlines payroll tracking by allowing you to record and manage State Unemployment Tax (SUTA) liabilities as part of your organization's overall payroll process. This ensures your nonprofit remains compliant with state tax regulations and maintains accurate financial records, simplifying tax filings and reporting.
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Frequently Asked Questions

Who is required to pay State Unemployment Tax?

Most employers, including nonprofits with paid staff, must pay State Unemployment Tax unless they qualify for special exemptions or reimbursement options.

How often do employers need to file and pay SUTA?

Employers typically file and pay SUTA quarterly, but requirements can vary by state. Check your state’s specific filing schedule.

Can nonprofits opt out of paying SUTA?

Some nonprofits may be eligible to reimburse the state for actual unemployment claims instead of paying the regular SUTA tax; this varies by state and organization type.

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Permanently Restricted Net Assets

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