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Average Unemployment Tax Rates

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last updated May 28, 2010

How do we stack up?
Average unemployment cost per employee, per state

In a sense, you cannot usefully compare the rate you pay in one state to the rate another employer pays in another state, because those rates are paid on very different taxable wage bases. In one state, you may apply your rate to the first $7,000 an employee earns; whereas in another state you may apply your rate to the first $35,000 an employee earns.

So what we do on this table is compare the average tax rates in the different states to all the employees in that state, to determine an average cost per employee.

Note how states with higher taxable wage bases are mostly in the high half of this expense table. Raising the taxable wage base is a covert but very effective way to hike your taxes. Many states adopt legislation which raises this wage base automatically each year, so that they never have to take the blame for raising the rate, while taxes are automatically increased, year after year.

Of course, average rates vary dramatically from one type of business to another, according to conditions affecting that type of business. And, the same tax rate will yield different costs depending on turnover, since the tax will be paid all over again for each employee who fills the same position.

Here, nevertheless, are the average costs1 per state in 2009, the last year for which data was generated. But note these options:

  1. To sort this list alphabetically by state, click on the link "state" below.
  2. To sort this list by taxable wage base, low to high, click on "wage base" below.
  3. To sort this list by the assigned tax rate as applied to the taxable wage base, click on "tax rate" below.
  4. To sort this list by the effective tax rate (called "wage rate" here) as applied to all the wages paid, not just the taxable wage base, click on "wage rate" below.
  5. To sort this list by the average dollar cost of this tax per employee, click on "cost per empl;oyee" below.
Rank State Wage Base Tax Rate Wage Rate Cost Per Employee2
  1. states ranked by average cost, low to high
  2. cost per employee = total taxes for the state divided by total number of workers
data from DOL