When you start a business in the United States, you don’t just have federal payroll taxes to think about. You also have state payroll taxes.
Most states have an income tax, and you’re responsible for withholding that from your employees’ paychecks. The only eight states that don’t have income tax are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
One other state—New Hampshire—has a non-traditional income tax that only applies to specific types of income.
All 50 states levy unemployment insurance (SUI) taxes, too. These are in addition to the Federal Unemployment Tax Act (FUTA) taxes that employers have to pay. Instead of having a unified tax submission process, each state has different requirements and portals you must use.
So let’s say you live in California. You’ll need to pay four different payroll taxes:
- FUTA tax at the current rate of 6.0%
- Federal income tax, which ranges from 10% to 37%
- State income tax, which ranges from 1% to 13.30%
- State unemployment tax, which is 3.4% for your first 2-3 years as an employer
In other words, it’s a lot.
Keep in mind that payroll encompasses a lot more than just these taxes—you’ve got benefits, health insurance, PTO, and all that other stuff to worry about. But the taxes alone can set your head spinning.
That’s why we strongly recommend using payroll software, which does the lion’s share of the work for you—and gives you clear instructions on how to do everything else.
Now for our quick-start guide to the payroll tax basics for every state.
Alabama
Income Tax: The state income tax rate ranges from 2% to 5%. The rate schedule is fairly straightforward: a single filer will pay 2% on the first $500 of taxable income, 4% on the next $2,500, and 5% on everything over $3,000.
Unemployment Insurance Tax: New employers pay an unemployment tax rate of 2.70% on the first $8,000 of each employee’s wages. After that, the state will assign a rate between 0.20% and 6.80% depending on the employer’s experience rating.
Alaska
Income Tax: Alaska has no personal income tax.
Unemployment Insurance Tax: Alaska levies an unemployment tax on both employees and employers. For new employers, employees pay a rate of 0.50% on the first $49,700 of their wages and employers pay an additional rate of 1.00 to 1.16% depending on their industry. Established employers and employees pay similar rates.
Arizona
Income Tax: Arizona has a flat tax rate of 2.5% across all filing statuses and income brackets.
Unemployment Insurance Tax: New employers pay unemployment insurance tax at a flat rate of 2.0% on the first $8,000 of an employee’s wages for at least two calendar years. After this initial period, the rate is determined by the employer’s reserve ratio.
Arkansas
Income Tax: The state income tax in Arkansas ranges from 2.00% to 4.90%, depending on income. However, filers making under $5,099 per year pay 0.00% in state income tax.
Unemployment Insurance Tax: New employers in Arkansas pay a flat unemployment income tax rate of 1.9% as of 2024. The taxable wage base is $7,000 per employee. After three years, Arkansas employers will pay unemployment tax rates between 0.1% to 5.0%. The exact rate depends on how much you’ve paid in versus paid out of your unemployment account. A stabilization tax of 0.125% is applied to all unemployment taxes in Arkansas.
California
Income Tax: California levies taxes at a rate based on income and filing status. The income tax rate ranges from 1% to 13.3%. The tax tables and schedules aren’t easy to find. Instead, you can check different scenarios using the state’s tax calculator tool.
Unemployment Insurance Tax: New employers in California pay an unemployment tax rate of 3.4% on the first $7,000 of an employee’s wages for two to three years. After this initial period, the California Employment Development Department will decide your rate based on your experience rating. The maximum rate is 6.2%.
State Disability Insurance Tax: California is one of a handful of states that levies a disability insurance tax. The rate, 1.1%, applies to all wages and is withheld from the employee’s paycheck.
Colorado
Income Tax: Colorado levies a personal income tax at a flat rate of 4.40% percent.
Unemployment Insurance Tax: For new employers, unemployment insurance tax rates begin at 0.2% and go up to 8.06% depending on the industry. Most employers will pay around 3% when they’re starting out. After that, the State of Colorado will assign a specific rate based on the standard premium rate schedule, the support surcharge schedule, and your solvency surcharge. The taxable wage base is $23,800.
Connecticut
Income Tax: Connecticut levies a progressive income tax at rates between 3.00 and 6.99%, plus additional fees for each tax bracket. For instance, a single filer that makes more than $50,000, but less than or equal to $100,000 would pay $2,300 plus 5.5% of the excess over $50,000.
Unemployment Insurance Tax: In Connecticut, new employers pay a flat tax of 2.8%. Once they’re not considered new anymore, they’ll pay a minimum rate of 1.7% and a max rate of 6.6%. The taxable wage base is $15,000.
Delaware
Income Tax: Delaware levies a graduated tax for earners who make under $60,000. The rate for these earners is 2.2% to 5.55%. For those who earn $60,000 and over, the tax rate can go up to 6.60%.
Unemployment Insurance Tax: New employers in Delaware will pay a rate of 1.2% in unemployment insurance taxes on the first $10,500 of each employee’s wages. After the initial period, the Department of Labor will assign each employer a tax rate between 0.1% and 6.5% based on merit.
Florida
Income Tax: Florida does not have a state income tax.
Unemployment Insurance Tax: Florida calls its unemployment insurance tax “reemployment tax.” New employers pay it at a rate of 2.7% on the first $7,000 of an employee’s wages. Florida’s Department of Revenue will then assign employers a tax rate based on how much money is in the employer’s account and how much has been withdrawn. The maximum reemployment tax rate is 5.4%.
Georgia
Income Tax: Georgia levies an income tax with graduated rates between 1% and 5.75%.
Unemployment Insurance Tax: Georgia’s unemployment insurance tax is 2.7% for new employers. After an initial period, the state’s Department of Labor will determine the employer’s rate based on their experience rating.
Hawaii
Income Tax: Hawaii has a graduated income tax. The lowest rate is 1.40%, and the highest is 11%.
Unemployment Insurance Tax: The unemployment insurance tax for new Hawaii employers is 3.0% on a taxable wage base of $59,100. After an initial period, you’ll pay the tax rate assigned to you by Hawaii’s unemployment insurance department. The maximum tax rate is 5.80%.
Employment and Training Assessment: Hawaii charges employers a flat tax of 0.01% for employee training and assessment.
Idaho
Income Tax: Idaho levies a flat income tax of 5.8%.
Unemployment Insurance Tax: New employers in Idaho pay a flat unemployment tax of 1.231% on a taxable wage base of $53,500.
Illinois
Income Tax: Illinois levies a flat income tax rate of 4.95%.
Unemployment Insurance Tax: Illinois levies an unemployment insurance tax rate of 3.525% for new employers on a wage base of $13,590. After the initial period, the Illinois Department of Economic Security will set a rate based on your experience rating. The minimum unemployment tax rate in Illinois is 0.300% with an added fund-building rate of 0.550%. The maximum rate is 8.100%, plus the 0.550% fund-building rate.
Indiana
Income Tax: Indiana charges a flat tax rate of 3.05% in 2024.
Unemployment Insurance Tax: New employers in Indiana will pay unemployment insurance tax at a rate of 2.5%. Once you’ve been an employer long enough to get an experience rating, your tax rate could drop to 0.50%, the minimum rate. Or it could rise to 9.40%. The taxable wage base in Indiana is $9,500.
Iowa
Income Tax: Iowa currently (2024) has a progressive tax rate system that starts at 4.40% and goes to 6.00%. But the state will impose a flat income tax rate of 3.90% starting in 2026.
Unemployment Insurance Tax: In Iowa, new non-construction employers pay 1.0% of the taxable wage base, $38,200. Construction employers pay a 7% rate. After a certain amount of time has passed, the Iowa Workforce Development will assign you a tax rate based on the benefit ratio.
Kansas
Income Tax: Kansas levies an income tax that ranges from 3.1% to 5.7%.
Unemployment Insurance Tax: Kansas charges new, non-construction employers a rate of 2.70%. Employers in the construction field must pay a rate of 6.00%. The taxable wage base is $14,000. Following the introductory period, the state will assign each employer a rate between 0.16% and 6%.
Kentucky
Income Tax: Kentucky has a flat tax rate of 5%.
Unemployment Insurance Tax: Kentucky charges employers an unemployment tax rate of 0.30% to 10%. New employers pay a rate of 2.7%. The taxable wage base in Kentucky is $11,400 per employee.
Louisiana
Income Tax: Louisiana levies a graduated income tax rate between 1.85% and 4.25%.
Unemployment Insurance Tax: Louisiana charges unemployment tax at a minimum rate of 0.09% and a maximum rate of 6.20%. The taxable wage base is $7,700 for each employee. New employers pay the average rate for their industrial classification.
Maine
Income Tax: Maine charges an income tax ranging from 5.8% to 7.15% of the taxable income.
Unemployment Insurance Tax: New employers must pay an unemployment insurance premium of 2.32% on each employee’s taxable wage base, $12,000. After this, the rate can vary based on the year’s tax schedule.
Maryland
Income Tax: Maryland’s income tax rates begin at 2.00% and cap out at 5.75% for the highest earners.
Unemployment Insurance Tax: New employers pay a tax rate of 2.60% on a taxable wage base of $8,500 in Maryland. After the introductory period, the tax rate is based on an employee’s benefit ratio and ranges from 0.30% to 7.50%.
Massachusetts
Income Tax: Massachusetts levies a flat income tax of 5%.
Unemployment Insurance Tax: New employers pay an unemployment tax rate of 1.45% on the taxable wages of $15,000. Unless they are in the construction industry, that is. In that case, the starting tax rate is 5.55%. After that, employers will be assigned a rate between 0.56% and 6.77%, depending on the year’s tax schedule and the employer’s reserve percentage. Negative percentages, however, can mean a tax rate of up to 18.55% of taxable wages.
Michigan
Income Tax: The income tax rate in Michigan is a flat 4.25% unless the general fund is higher than expected. In that case, reductions can apply. In 2023, for example, the rate was 4.05%.
Unemployment Insurance Tax: Michigan charges new employers a flat unemployment insurance tax of 2.7% during the first two years. After that, a complex formula is used to determine the new rate.
Minnesota
Income Tax: Minnesota’s income tax rate ranges from 5.35% to 9.85%.
Unemployment Insurance Tax: Established employers pay unemployment insurance taxes at a rate between 0.10% and 8.90%. New employers pay the average for their industry. The taxable wage base is $40,000.
Mississippi
Income Tax: Mississippi charges a flat tax of 5% on all income exceeding $10,000. The rate will decrease over the next several years, settling at 4% in 2026.
Unemployment Insurance Tax: First-year employers pay an unemployment tax rate of 1% of the taxable wage base, $14,000. Second-year employers pay 1.10% and third-year employers pay 1.20%. After this, the rate can range from 0.0% and 5.4%.
Missouri
Income Tax: Missouri’s income tax ranges from 2.00% to 4.95%.
Unemployment Insurance Tax: New employers pay a general rate of 2.376% of the taxable wage base, which is $7,000 per employee. After two or three years, they’re assigned a rate between 0.0% and 6.0%.
Montana
Income Tax: For 2023, Montanans pay income taxes according to seven tax brackets ranging from 1% to 6.75%. But beginning in 2024, the state will have just two tax brackets: 4.7% and 5.9%.
Unemployment Insurance Tax: Montana’s taxable wage base changes slightly every year. For 2024, it is $43,000, and the unemployment tax rate ranges from 0.00% and 6.12%. New employers pay a rate between 1% and 2.10%, depending on their industry.
Nebraska
Income Tax: Nebraska’s income tax rate ranges from 2.46% to 6.84%.
Unemployment Insurance Tax: Nebraska charges new, non-construction employers a rate of 1.25% on a taxable wage base of $9,000. For construction employers, the rate is 5.40% on a wage base of $24,000. After the introductory period, the tax rate varies from 0% to 5.40%.
Nevada
Income Tax: Nevada does not have an individual income tax.
Unemployment Insurance Tax: Nevada levies an unemployment insurance tax rate of 2.95% on a taxable wage base of $40,600 (for 2024). After the introductory period, the rate can vary from 0.25% to 5.40%.
New Hampshire
Income Tax: New Hampshire does not levy individual income taxes on wages. It does impose a 3% tax (in 2024) on income earned from interest and dividends.
Unemployment Insurance Tax: New employers in New Hampshire pay an unemployment tax rate of 1.7% on a taxable wage base of $14,000. Everyone else pays between 0.1% and 7.5%, depending on their experience rating.
New Jersey
Income Tax: New Jersey income tax rates range from 1.4% to 10.75%.
Unemployment Insurance Tax: New employers pay a rate of 3.2825% for the first three years. After that, the state assigns a tax rate based on the reserve ratio. The taxable wage base for 2024 is $42,300.
State Disability Insurance Tax: New employers pay 0.005% for the first three years. A different tax rate may be assigned after three calendar years. The taxable wage base for 2024 is $42,300.
New Mexico
Income Tax: New Mexico charges income tax at a rate between 1.7% and 4.9%.
Unemployment Insurance Tax: For new employers, New Mexico’s unemployment insurance tax is either 1% or the industry average, whichever is greater. After the initial period, a rate of 0.33% to 5.4% applies. The taxable wage base for 2023 is $30,100.
New York
Income Tax: New York levies individual income taxes at a rate between 4% and 10.9%.
Unemployment Insurance Tax: New employers pay a 4.1% unemployment insurance tax rate. Everyone else pays between 2.1% and 9.9%. The taxable wage base is $12,300 per employee.
North Carolina
Income Tax: North Carolina levies a flat income tax rate of 4.75% (2023), which will go down to 4.5% in 2024 and eventually land at 3.99% after 2025.
Unemployment Insurance Tax: Beginning employers pay a UI tax rate of 1%. After this, the rate varies between 0.06% to 5.76%.
North Dakota
Income Tax: North Dakota levies a progressive income tax ranging from 1.95% to 2.50%.
Unemployment Insurance Tax: North Dakota updates its state unemployment insurance tax each year. For 2024, it charges a new employer rate of 1.09% for positive balances and 6.08% for negative balances. Newly established construction employers have a flat rate of 9.68% for positive or negative balances. After an initial period, the tax rate ranges from 0.08% to 9.68%. The taxable wage base for 2024 is $43,800—each year, North Dakota updates it based on the statewide average wage.
Ohio
Income Tax: Ohio levies a progressive income tax ranging from 2.75% to 3.75% for all taxpayers making more than $26,050.
Unemployment Insurance Tax: In Ohio, new employers pay a SUI tax rate of 2.7% unless they’re in the construction industry. Those employers pay a new-employer rate of 5.6%. After a couple of years, the state assigns employers a rate between 0.4% and 13.3% on a taxable wage base of $9,000. The rate depends on the employer’s experience rating.
Oklahoma
Income Tax: Oklahoma’s income tax ranges from 1% to 4.75%…sort of. Oklahoma complicates things a bit by charging an actual rate of 1/4 of 1% on the first $1,000 and up to $153.50 plus 4.75% of income over $7,200 for single filers. For married filers, it’s 1/4 of 1% on the first $2,000, or up to $224.50 plus 4.75% of income over $12,200. Basically, if you pay your employees a taxable wage higher than $12,200, the tax rate is 4.75%.
Unemployment Insurance Tax: Newly established employers pay a SUI rate of 1.5% on a taxable wage base of $25,700. After the initial period, the rate can range from 0.3% to 9.2%.
Oregon
Income Tax: Oregon levies an income tax with rates between 4.75% to 9.9%.
Unemployment Insurance Tax: New employers will pay a rate of 2.4% on the first $52,800 of each employee’s wages in 2024. Established employers pay between 0.7% to 5.4% on the taxable wage base.
Paid Leave Tax: Employers and employees alike contribute to the state’s Paid Leave Oregon Trust Fund. In 2024, the rate is 1% of up to $168,600 of an employee’s wages.
Pennsylvania
Income Tax: Pennsylvania levies a flat tax income rate of 3.07%.
Unemployment Insurance Tax: Pennsylvania charges a SUI tax of 3.5% for new, non-construction employers. Newly established construction employers pay 9.7%. After the first three years, the rate can be between 6.4968% and 10.6464% or higher for delinquent accounts.
Rhode Island
Income Tax: Rhode Island charges a graduated income tax ranging from 3.75% to 5.99%.
Unemployment Insurance Tax: New employers in Rhode Island pay 1% in SUI tax on the 2024 taxable wage base of $29,200. After the initial period, the rate ranges from 1.1% to 9.7%.
Temporary Disability Insurance Tax: Rhode Island levies a temporary disability insurance (TDI) tax of 1.2% on the first $84,000 of each employee’s income.
South Carolina
Income Tax: South Carolina levies an income tax with three brackets: 0.00%, 3%, and 6.4%.
Unemployment Insurance Tax: New employers in South Carolina pay a rate of 0.410% in 2024. After the initial period, the rate can range from 0.060% to 5.460%.
South Dakota
Income Tax: South Dakota does not levy income taxes.
Reemployment (Unemployment) Insurance Tax: New, non-construction employers in South Dakota pay 1.2% plus a 0.55% administrative fee on the taxable wage base of $15,000. Employers in the construction industry pay 6% plus a 0.55% fee. In the second and third years, these rates drop to 1% and 3%, respectively, as long as the employer has a positive account balance. After the third year, the rate ranges from 0% to 9.5%.
Tennessee
Income Tax: Tennessee does not levy state income tax.
Unemployment Insurance Tax: Tennessee levies a SUI tax ranging between 0.01 and 10% on a taxable wage base of $7,000. New employers pay 2.7%.
Texas
Income Tax: Texas does not have income tax.
Unemployment Insurance Tax: New employers pay about 2.7% on the taxable wage base of $9,000. Established employers pay 0.25% to 6.25%.
Utah
Income Tax: Utah has a flat income tax rate of 4.65%.
Unemployment Insurance Tax: Utah pays a SUI tax rate between 0.3% and 7.3%, with new employers assigned an average rate for their industry. The taxable wage base is $47,000 for 2024.
Vermont
Income Tax: Vermont levies a progressive income tax that ranges from 3.35% to 8.75%.
Unemployment Insurance Tax: New employers in Vermont pay 2.0% to 4.1% in SUI tax depending on their industry. After that, the rates can range between 0.4% to 8.4%.
Virginia
Income Tax: Virginia’s income tax rates range from 2% to 5.75%.
Unemployment Insurance Tax: The new employer rate is 2.5% plus add-ons, and established employers pay between 0.1% to 6.2%.
Washington
Income Tax: Washington does not levy an income tax.
Unemployment Insurance Tax: Washington’s SUI tax ranges from 0% to 8.15% and is levied on the first $67,600 of each employee’s wages.
West Virginia
Income Tax: West Virginia’s income tax ranges from 2.36% to 5.12%.
Unemployment Insurance Tax: SUI tax in West Virginia ranges from 1.5% to 8.5% on a wage base of $9,000. New employers pay 2.70% until they’re assigned a rate based on their account balance.
Wisconsin
Income Tax: In Wisconsin, the individual income tax rate varies between 3.5% and 7.65%.
Unemployment Insurance Tax: Wisconsin’s SUI tax rates range from 0% to 12%. New employers pay 0.55% to 2.55%, depending on their income and size. Construction employers, however, pay 0.55 to 3.10%.
Wyoming
Income Tax: Wyoming does not levy an individual income tax.
Unemployment Insurance Tax: Wyoming charges 0.09% to 8.5% in SUI taxes whether you’re a new employer or not. The taxable wage base changes each year. In 2024, it’s $30,900.
