SUI stands for State Unemployment Insurance. It shows up on your paystub, but it’s not taken from your pay. Your employer pays it.
Why? That money goes to help workers who lose their jobs. Even if you’re not paying it, it’s part of the payroll system.
Wondering how it works, or what it means for you? Let’s break it down.
What Does SUI Mean on a Paystub?
As we have seen above, SUI is a payroll tax that employers are required to pay. The funds go toward unemployment benefits for workers who are laid off through no fault of their own.
You might see “SUI” listed on your paystub. If you’re an employee, it’s just informational. It tells you your employer is paying into the state unemployment system on your behalf.
If you’re a business owner, freelancer, or independent contractor with employees, this is a tax you’re responsible for paying. It’s not optional.
Why Is SUI Important?
SUI protects workers and helps stabilize the economy. When someone loses their job, SUI provides temporary income while they look for a new one. That income helps them stay afloat, and keeps money circulating in local communities.
As a business owner, contributing to this fund ensures you’re compliant with state laws and helps your former employees get the help they need.
Who Pays SUI?
Only employers pay SUI. It’s not deducted from an employee’s paycheck.
However, there are a few exceptions. In some states, like Alaska, New Jersey, and Pennsylvania, employees also contribute a small amount toward SUI. In those cases, it might show as a deduction from your gross pay.
But in most states, SUI is 100% paid by the employer.
How Is SUI Calculated?
The SUI tax rate and wage base vary by state. That means:
⦿ Each state sets its own tax rate
⦿ Each state sets a wage base limit (the maximum earnings you pay tax on per employee)
⦿ Your rate might be adjusted based on your business history
For example, if your business has a high turnover rate or frequent layoffs, you might pay a higher SUI rate. On the other hand, if you’ve maintained stable employment, you may qualify for a lower rate.
Let’s say your state’s wage base is $10,000 and your rate is 2%. You’ll pay $200 in SUI tax per employee for the year. After that, you don’t pay more for that worker until the next year.
SUI vs. SUTA: Are They the Same?
You might hear SUI and SUTA used interchangeably. And yes, they’re essentially the same.
⦿ SUI is the insurance program
⦿ SUTA stands for the State Unemployment Tax Act, the law that mandates the tax
In practical terms, both refer to the same thing: the unemployment tax that employers pay to the state.
Different paystub software or payroll providers might use either acronym, depending on preference or state standards.
How Does SUI Appear on a Paystub?
If you’re looking at your paystub and see “SUI,” it will typically be listed under employer-paid taxes or deductions. You won’t see it affecting your net pay unless you’re in a state where employees contribute.
As an employer, your payroll software should calculate and report this for you.
If you use a paystub generator like PaystubHero, you’ll see clear breakdowns of all employer liabilities, including SUI.
What About ETA and Other Payroll Acronyms?
Alongside SUI and SUTA, you might come across other confusing payroll terms. One of them is ETA, and no, it’s not “Estimated Time of Arrival.”
In payroll and tax contexts, ETA refers to the Employment and Training Administration. This is a federal agency that oversees programs related to employment, including unemployment insurance.
You won’t usually see ETA directly on your paystub, but it’s behind the scenes, making sure systems like SUI and federal unemployment insurance work.
SUI vs. SDI: What’s the Difference?
Another common confusion: SUI vs. SDI.
⦿ SUI = State Unemployment Insurance
⦿ SDI = State Disability Insurance
SUI pays benefits to workers who are laid off. SDI provides income for employees who can’t work due to non-work-related illness or injury.
Not every state has SDI. California, for example, does. Others don’t.
Both may appear on a paystub. SUI as an employer tax, and SDI as an employee deduction (in states where it applies).
Why Should Business Owners Care About SUI?
If you’re running a business, understanding SUI is critical. Here’s why:
⦿ It’s mandatory. Failing to pay means penalties.
⦿ It affects your bottom line. Higher rates mean higher costs.
⦿ You can influence your rate. Fewer layoffs = lower rate = less tax.
Keeping your SUI account in good standing also helps when hiring. If your former employees apply for unemployment, delays or denials from unpaid SUI taxes can come back to bite you.
Bottom line? Know your state’s rules, keep up with payments, and track your rates every year.
Managing SUI Made Simple with PaystubHero
Dealing with payroll taxes doesn’t have to be complicated. With the right tool, you can automate the messy stuff and avoid costly mistakes.
PaystubHero is built for entrepreneurs, freelancers, and small businesses. Our paystub generator calculates employer taxes like SUI, FICA, and Medicare automatically. Based on the latest 2025 tax rates.
All you do is enter your company and employee info, we handle the math. It’s fast, accurate, and 100% compliant.
Whether you have one contractor or a growing team, PaystubHero helps you keep payroll clean, clear, and legal.
FAQs
Here are some questions about SUI on paystubs
