When must you register?
When you have an employee working in a state and pay wages that make you liable under that state's rules, which in most states happens quickly once regular payroll starts. Register before your first quarterly report is due; many states expect registration within days or weeks of the first payroll. Owners of sole proprietorships and partners are not employees for this purpose; S corporation owners on payroll are. See hiring your first employee.
Which state does an employee belong to?
Usually the state where the employee works. For employees working in several states, uniform rules look first at where the work is localized, then at the employee's base of operations, then at where the work is directed from, and finally at the employee's home state. Remote employees generally count in the state where they work from home.
The wider setup is covered in remote employees in another state.
How do you register?
Get an EIN
Before registering with the state. See how to get an EIN.
Register with the state agency
Usually online, often with the state withholding tax registration at the same time.
Receive your account number and rate
Add them to your payroll system.
File quarterly reports
Wages per employee and tax due, by the state's deadline.
Watch for rate notices
Rates are usually updated each year.
How are rates and wage bases set?
New employers get a standard new employer rate set by each state. After a few years, the rate depends on the employer's experience, mainly how many former employees claimed benefits. Each state taxes wages up to its own annual wage base, which ranges from the federal $7,000 to much higher amounts in some states. Payroll providers apply these automatically once the account is set up.
How does it affect federal unemployment tax?
Federal unemployment tax is 6.0% of the first $7,000 of wages, but employers get a credit of up to 5.4% for state unemployment tax paid on time, leaving 0.6%. Late state payments can reduce the credit. See Form 940 and payroll taxes explained.
Do contractors count?
Independent contractors are not covered, but states can reclassify them as employees and assess unemployment tax, often using stricter tests than the IRS. See contractor or employee.
Hiring your first employee?
We register you for state unemployment and withholding taxes, set up payroll, and file your quarterly reports.
Questions people ask
When do I need to register for state unemployment tax?
When you pay wages to an employee working in the state, usually before or soon after the first payroll.
Which state do I pay unemployment tax to for a remote employee?
Usually the state where the employee works, which for remote staff is generally where they work from home.
What is the state unemployment tax rate for new employers?
A standard new employer rate set by each state, later adjusted based on experience.
How does SUTA affect FUTA?
Paying state unemployment tax on time gives a credit of up to 5.4% against the 6.0% federal rate.
Sources
Every fee, date and rule on this page was taken from these official and primary sources.
- U.S. Department of Labor: State unemployment insurance tax information
- IRS: Instructions for Form 940
- IRS: State government websites
Rules and fees change. If you are reading this long after October 1, 2026, confirm the figures with the source before you rely on them.
Related guides
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This guide is general information. It is not tax or legal advice for your situation.