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Unemployment insurance experience rating
| Unemployment insurance |
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| • Terms and definitions • Court cases • Unemployment insurance programs in the states • Reform proposals related to unemployment insurance • Reform activity in the states related to unemployment insurance • Index of articles about unemployment insurance |
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An unemployment insurance experience rating, or experience rating, is a term that refers to a tax evaluation tool used by state unemployment insurance programs that allows states to collect unemployment taxes from employers according to the amount of unemployment insurance benefits drawn by their former employees. Experience ratings determine the state unemployment tax rates employers must pay. Employers with low experience ratings pay less in state unemployment taxes than employers with high experience ratings.[1]
Background
Under the joint federal-state unemployment insurance program, the federal government oversees the general administration of state unemployment insurance programs. The states control the specific features of their unemployment insurance programs, such as eligibility conditions, length of benefits, and experience ratings.
New employers begin paying into the unemployment insurance system at the new employer rate. During this period, employers pay a consistent, state-determined unemployment tax rate. Employers receive an experience rating after they have paid unemployment insurance taxes for a set time period (usually a few years, depending on state laws). Experience ratings correspond to a range of unemployment tax percentages on the wage base (taxable employee wages) in each state.
The more unemployment claims an employer has, the higher their state unemployment tax (SUTA) rate. For example, in Arizona, employers with the lowest experience rating pay a 0.08% tax on the first $7,000 paid to an employee. Employers with the highest experience rating pay a 20.6% tax on the first $7,000 paid to an employee.[2][3]
In Nebraska and Rhode Island, wage bases are also adjustable depending on an employer's experience rating. For example, in Nebraska, most employers pay unemployment taxes on the first $9,000 paid to an employee. Employers with the highest experience ratings pay the top unemployment tax rate (5.4%) on the first $24,000 paid to an employee.[2][3]
The federal government does not use an experience-rated system for Federal Unemployment Tax Act (FUTA) taxes.
Unemployment tax ranges by state
SUTA tax amounts vary by state. The following list provides a summary of the SUTA tax amounts across states as of January 2025:[3][2][4]
- The new employer rate ranged from 0.35% in South Carolina to 6.09% in some cases in North Dakota.
- Regular rates ranged from 0% for employers with the lowest experience rating in 10 states (Iowa, Missouri, Mississippi, Montana, Kansas, Nebraska, New York, South Dakota, Wisconsin, and Wyoming) up to 12.65% in Massachusetts for employers with the highest experience ratings.
- Arkansas, California, Florida, and Tennessee had the lowest wage bases at $7,000, and Washington had the highest wage base at $72,800.
The table below outlines regular SUTA tax rate ranges for experienced employers and wage bases and new employer SUTA tax rates for all 50 states as of January 2025.
| State unemployment tax rates | |||
|---|---|---|---|
| State | SUTA new employer tax rate | Employer tax rate range[5] | SUTA wage bases |
| Alabama | 2.7% | 0.20% – 6.80% | $8,000 |
| Alaska | 1.0% | 1.00% – 5.40% | $51,700 |
| Arizona | 2.0% | 0.04% – 9.72% | $8,000 |
| Arkansas | 2.0% | 0.1% – 5.0% | $7,000 |
| California | 3.4% | 1.5% – 6.2% | $7,000 |
| Colorado | 3.05% | 0.64% – 12.34% | $27,200 |
| Connecticut | 2.2% | 0.1% – 10.0% | $26,100 |
| Delaware | 1.0% | 0.3% – 5.4% | $12,500 |
| D.C. | 2.7% or prior year average | 1.00% – 7.40% | $9,000 |
| Florida | 2.7% | 0.1% – 5.4% | $7,000 |
| Georgia | 2.7% | 0.06% – 8.1% | $9,500 |
| Hawaii | 2.4% | 2.4% – 5.6% | $62,000 |
| Idaho | 1.0% | 0.23% – 5.4% | $55,300 |
| Illinois | 3.65% | 0.75% – 7.85% | $13,916 |
| Indiana | 2.5% | 0.5% – 11.2% | $9,500 |
| Iowa | 1.0% | 0.0% – 7.0% | $39,500 |
| Kansas | 1.75% | 0.0% – 6.65% | $14,000 |
| Kentucky | 2.7% | 0.3% – 9.0% | $11,700 |
| Louisiana | Varies | 0.09% – 6.2% | $7,700 |
| Maine | 2.41% | 0.3% – 6.27% | $12,000 |
| Maryland | 2.6% | 0.3% – 7.5% | $8,500 |
| Massachusetts | 2.13% | 0.83% – 12.65% | $15,000 |
| Michigan | 2.7% | 0.06% – 10.3% | $9,000 |
| Minnesota | Varies | 0.4% – 8.9% | $43,000 |
| Mississippi | 1.0% | 0.0% – 5.4% | $14,000 |
| Missouri | 1.0% (nonprofits) 2.376% (others) | 0.0% – 6.0% | $9,500 |
| Montana | Varies | 0.00% – 6.12% | $45,100 |
| Nebraska | 1.25% | 0.0% – 5.4% | $9,000 ($24,000 for max rate) |
| Nevada | 2.95% | 0.25% – 5.4% | $41,800 |
| New Hampshire | 2.7% | 1.00% – 7.00% | $14,000 |
| New Jersey | 3.1% | 0.6% – 6.4% | $43,300 |
| New Mexico | 1.0% | 0.33% – 5.4% | $33,200 |
| New York | 4.1% | 0.0% – 8.9% | $12,800 |
| North Carolina | 1.0% | 0.06% – 5.76% | $32,600 |
| North Dakota | 1.03% (positive) 6.09% (negative) | 0.08% – 9.69% | $45,100 |
| Ohio | 2.7% | 0.5% – 10.2% | $9,000 |
| Oklahoma | 1.5% | 0.3% – 9.2% | $28,200 |
| Oregon | 2.4% | 0.9% – 5.4% | $54,300 |
| Pennsylvania | 3.822% | 1.42% – 10.37% | $10,000 |
| Rhode Island | 1.21% | 1.1% – 9.7% | $29,800 ($31,300 for negative balance) |
| South Carolina | 0.35% or 1% | 0.06% – 5.46% | $14,000 |
| South Dakota | 1.2% | 0.0% – 8.8% | $15,000 |
| Tennessee | Varies | 0.01% – 10.0% | $7,000 |
| Texas | 2.7% | 0.25% – 6.25% | $9,000 |
| Utah | Varies | 0.2% – 7.2% | $48,900 |
| Vermont | 1.0% | 0.4% – 5.4% | $14,800 |
| Virginia | 2.5% | 0.1% – 6.2% | $8,000 |
| Washington | Varies | 0.27% – 8.15% | $72,800 |
| West Virginia | 2.7% | 1.5% – 8.5% | $9,500 |
| Wisconsin | 3.05% (<$500k payroll) 3.25% (>$500k payroll) | 0.0% – 12.0% | $14,000 |
| Wyoming | Varies | 0.0% – 8.5% | $32,400 |
See also
- Unemployment insurance
- Unemployment insurance fraud
- Unemployment insurance fraud recovery
- Unemployment taxes
- Unemployment Trust Fund
- Unemployment filings during the coronavirus (COVID-19) pandemic, 2020-2021
- State government plans to end federal unemployment benefits related to the coronavirus (COVID-19) pandemic, 2021
External links
Footnotes
- ↑ Washington Legislature, "Washington State's Experience Rating System," accessed May 25, 2021
- ↑ 2.0 2.1 2.2 APS Payroll, "SUTA WAGE BASES," accessed March 12, 2025
- ↑ 3.0 3.1 3.2 Patriot, "What Is My State Unemployment Tax Rate?" accessed July 8, 2021 Cite error: Invalid
<ref>tag; name "patriot" defined multiple times with different content - ↑ Paycom, "SUTA Tax Rate 2024: All You Need to Know," accessed March 12, 2025
- ↑ Dependent on employer's experience rating.
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