How Do I Get Information on State Unemployment Taxes?
Each state has an unemployment tax fund into which employers must pay, through an unemployment tax. Most employers must pay into both the federal unemployment tax system and their state system, except for small employers.
State unemployment rates and payment requirements differ in amount and how they are charged and paid. State unemployment taxes are paid to the state workforce office or state department of labor.
State Unemployment Taxes and Tax Rates
Most states base unemployment taxes on the federal tax requirements; a few states have different requirements for when unemployment taxes must be paid; check with your state about its requirements. State unemployment tax rates are based on employer experience - the number of claims of similar employers in your industry - and the rates changes yearly. New employers pay a standard rate until their experience rating is determined.
Employers must pay into both federal and state unemployment funds if they (1) pay wages to employees totaling $1500 or more in any quarter, or (2) have at least one employee during any day of the week during 20 weeks in a calendar year, regardless of whether or not the weeks were consecutive.
Employee Deductions for Unemployment Taxes
A few states (currently Alaska, New Jersey, and Pennsylvania) require employers within the state to take unemployment tax deductions from employees.
If you have a business presence in one or more of those states, check on this requirement.
Questions to Ask When Starting Out as An Employer for Unemployment Taxes
Some questions to ask if you are a new employer and want to comply with your state's unemployment tax program requirements:
- How do I apply?
- What is my company's rate? Is it different for new companies? How often is the rate determined?
- What are employees covered? Which employees are not covered?
- Must I file annual reports?
- How and when do I pay unemployment taxes? Can I file and pay online?
- What happens if a former employee files a claim?
State Unemployment Benefits for Independent Contractors
Most states do not include independent contractors in unemployment assistance programs, nor are employers required to pay unemployment taxes on these workers. Check with your state to see if independent contractors can file claims and whether you must pay unemployment taxes for these workers. Also, be aware that some states allow people to work as independent contractors while collecting unemployment benefits as employees.
State Unemployment Tax Departments
To find your state's unemployment tax department (different from the agency which pays unemployment benefits to workers) go to this Department of Labor page, click on your state, and look for the office of the department of labor, or workforce development (the office has different titles in different states).
Some Examples of State Unemployment Tax Regulations
California has an unemployment tax program for employers called E-Services Online.
The 2016 Employer's Guide for California states:
Tax-rated employers pay a percentage on the first $7,000 in wages paid to each employee in a calendar year. New employers pay 3.4 percent (.034) for a period of two to three years.
In Florida, the unemployment tax law is called the Reemployment Assistance Program. The state has an excellent booklet that provides a lot of information to employers about how to report and pay unemployment taxes in a variety of situations.