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What is State Unemployment Tax?


State Unemployment Tax, also known as (SUTA) State Unemployment Tax Act, is a payroll tax paid by employers to fund unemployment benefits for eligible workers who have lost their jobs.


Some states may also use the following terms to define (SUTA):


  • State unemployment insurance
  • SUI
  • Re-employment Tax


Who Pays the State Unemployment Tax?


The employer entirely pays the State unemployment tax. The employer’s responsible for addressing the State Unemployment Tax to the state’s unemployment insurance program on behalf of their employees.


Employers must contribute to the unemployment insurance program in the state where they are located. The tax is entirely based upon the employer’s payroll and is then used to fund the unemployment benefits for legitimately lost jobs, which is not their fault.


Why do I owe State Taxes for Unemployment?


If you owe state taxes for unemployment, you receive unemployment benefits throughout the year, which are treated as taxable income in the eyes of the state level. Unemployment benefits are subject to income tax in most states, and you may owe the state income taxes on the amount you receive.


Also, See: State Income Tax

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