Background
How state unemployment insurance works
State unemployment insurance (SUI, also called SUTA — State Unemployment Tax Act) funds the unemployment benefits that workers receive after losing a job through no fault of their own. In the vast majority of states, SUI is a payroll tax paid exclusively by the employer. The employer's rate varies based on factors such as industry, company size, and the employer's layoff history (the "experience rating"). Employees in those states see no SUI deduction on their pay stubs at all.
The three exceptions — Alaska, New Jersey, and Pennsylvania — require employees to share in the cost. The employee contribution is withheld from each paycheck, just like federal income tax or FICA, until the employee's year-to-date wages reach the state's taxable wage base for that year. After that point, the deduction stops for the remainder of the calendar year.
How SUI differs from FUTA
SUI operates at the state level and funds state-administered unemployment benefits. The Federal Unemployment Tax Act (FUTA) is a separate, federal-level tax with a statutory rate of 6.0 percent on the first $7,000 of wages per employee per year. Employers who pay state unemployment taxes on time receive a credit of up to 5.4 percent against FUTA, reducing the effective federal rate to 0.6 percent in most states. Critically, FUTA is always employer-paid — no employee in any state pays FUTA.
Alaska: employee SUI at 0.50%
Alaska requires employees to contribute 0.50 percent of their covered wages to the state unemployment insurance fund. This rate is set by Alaska statute and has been stable at this level. The deduction is withheld from each paycheck and applies to wages up to the state's annual taxable wage base. To verify the current wage base for the year, check the Alaska Department of Labor and Workforce Development website.
Alaska is also notable for having no state income tax, which means the SUI deduction is one of the few state-level payroll taxes that Alaskan workers see on their pay stubs. For full take-home details, see our Alaska salary after taxes page.
Paycheck impact in Alaska
At 0.50 percent, an employee earning $60,000 per year would have approximately $300 withheld annually for SUI, or about $11.54 per biweekly paycheck — assuming wages remain below the taxable wage base for the full year. Once the wage base is reached, the deduction stops, and remaining paychecks in the year are slightly larger.
New Jersey: employee SUI at 0.3825%
New Jersey requires employee contributions to both state unemployment insurance and the state's supplemental workforce programs. The employee SUI rate for 2026 is 0.3825 percent. New Jersey also requires employee contributions to several related programs:
- Temporary Disability Insurance (TDI) — a separate deduction that funds short-term disability benefits.
- Family Leave Insurance (FLI) — funds paid family leave.
- Workforce Development/Supplemental Workforce Fund (WF/SWF) — a small additional payroll contribution.
These additional deductions are separate from SUI and have their own rates and wage bases. Together they make New Jersey one of the states with the most employee-side payroll deductions. Rates can change annually — verify the current rates at the New Jersey Department of Labor and Workforce Development. For overall take-home, see our New Jersey salary after taxes page.
Paycheck impact in New Jersey
At 0.3825 percent, an employee earning $80,000 per year would have approximately $306 withheld annually for SUI alone (assuming the full salary falls below the wage base), or about $11.77 per biweekly paycheck. Combined with the TDI, FLI, and WF/SWF deductions, New Jersey employees see a noticeable set of state payroll items on each stub beyond just state income tax.
Pennsylvania: employee SUI at 0.07%
Pennsylvania's employee SUI rate is 0.07 percent — the lowest of the three states by a wide margin. The deduction applies to wages up to the state's taxable wage base. Verify the current wage base at the Pennsylvania Department of Labor & Industry unemployment compensation page. For full take-home details, see our Pennsylvania salary after taxes page.
Paycheck impact in Pennsylvania
At 0.07 percent, an employee earning $60,000 per year would have approximately $42 withheld annually — about $1.62 per biweekly paycheck. This is small enough that many Pennsylvania employees do not notice it, but it does appear as a separate line item on the pay stub and is worth understanding when reconciling deductions.
Comparison
Employee SUI comparison table
| State | Employee SUI rate | Annual cost on $60K salary | Per biweekly paycheck | State income tax? |
|---|---|---|---|---|
| Alaska | 0.50% | ~$300 | ~$11.54 | No |
| New Jersey | 0.3825% | ~$230 | ~$8.83 | Yes |
| Pennsylvania | 0.07% | ~$42 | ~$1.62 | Yes (flat 3.07%) |
| All other states | 0% | $0 | $0 | Varies |
Annual cost figures are illustrative, assuming wages remain under the state's taxable wage base for the full year. Actual amounts depend on the current year's wage base — check the state labor department for exact figures. New Jersey cost shown for SUI only; TDI, FLI, and WF/SWF deductions are additional.
Do related state programs also deduct from paychecks?
Beyond SUI specifically, several states require employee contributions to disability or family leave insurance programs that function similarly to payroll taxes. These are technically separate from unemployment insurance but often appear near SUI on pay stubs:
- New Jersey — TDI, FLI, and WF/SWF as noted above.
- California — State Disability Insurance (SDI) at a rate set annually by the EDD, and Paid Family Leave (PFL) funded through SDI contributions.
- New York — Disability Benefits Law (DBL) contributions and Paid Family Leave (PFL) contributions.
- Hawaii — Temporary Disability Insurance (TDI), though often paid through employer plans.
- Rhode Island — Temporary Disability Insurance (TDI).
These are not unemployment insurance deductions, but employees in these states may see them on their stubs alongside the more familiar federal and state income-tax withholding. For a full breakdown of every deduction on your paycheck, see our paycheck deductions explained guide.
How employee SUI appears on your pay stub
The employee SUI deduction typically appears as a line item labeled "SUI," "State UI," "UC" (unemployment compensation, common in Pennsylvania), or "NJSUI" (in New Jersey). It is listed among the deductions alongside federal income tax, state income tax, Social Security, and Medicare. Because it is a percentage of gross wages up to a cap, the deduction appears on every paycheck until the wage base is reached, after which the line goes to zero or disappears.
If you are unsure whether a deduction on your stub is employee SUI, cross-reference the label with your state's labor department publications or ask your payroll department. Misidentified deductions can lead to confusion during tax-filing season.
SUI and your overall take-home pay
Employee SUI is a relatively small part of total payroll deductions — especially in Pennsylvania, where it adds only a few dollars per paycheck. The larger factors affecting take-home are federal income tax, state income tax (if applicable), Social Security (6.2 percent up to the wage base), and Medicare (1.45 percent with no cap plus 0.9 percent above $200,000). Use our salary paycheck calculator to see all deductions in one place, or check the overtime exempt salary threshold page if you are evaluating whether your position qualifies for overtime pay that affects total compensation.
Questions
Employee unemployment tax FAQ
Which states deduct unemployment insurance from employee paychecks?
Only three states require employee contributions to state unemployment insurance: Alaska, New Jersey, and Pennsylvania. In all other states, unemployment insurance is funded entirely by employer contributions. The employee deduction appears as a separate line item on your pay stub.
What is the difference between SUI and FUTA?
SUI (State Unemployment Insurance) is a state-level tax that funds unemployment benefits in that state. FUTA (Federal Unemployment Tax Act) is a federal tax that funds federal unemployment administration and loans to states with depleted funds. FUTA is always employer-paid at 6.0% on the first $7,000 of wages per employee, with a credit of up to 5.4% for timely SUI payments, reducing the effective FUTA rate to 0.6% in most states. Employees never pay FUTA.
Can I deduct employee SUI contributions on my tax return?
Employee SUI contributions are generally not deductible as a federal income tax deduction. They are treated as state taxes paid, but under the current SALT deduction cap of $40,000 for 2026 (set by the One Big Beautiful Bill Act), they would be included in the total state and local tax deduction only if you itemize and have not already reached the cap. For most employees who take the standard deduction, SUI contributions provide no direct tax benefit.
Does the employee SUI deduction stop after reaching a wage base?
Yes. Each of the three states sets an annual taxable wage base for SUI. Once your year-to-date earnings reach that ceiling, the SUI deduction stops for the remainder of the calendar year, similar to how Social Security tax stops at the federal wage base. The wage base is set annually by each state's labor department.
Do independent contractors pay employee SUI?
No. Independent contractors (1099 workers) are not covered by the state unemployment insurance system and do not have SUI withheld from their payments. SUI applies only to W-2 employees. However, misclassified workers who should be employees may be entitled to unemployment benefits and the corresponding SUI framework.
- Sources: Alaska Dept. of Labor & Workforce Development · NJ Dept. of Labor & Workforce Development · PA Dept. of Labor & Industry · IRS Publication 15 (FUTA).
- 🔄 Last updated August 4, 2026 · Tax year 2026
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