Navigating Pennsylvania's SUI Tax in 2025

Employees and employers in Pennsylvania contribute to the state’s unemployment insurance (SUI) fund.

Employee Contributions

Each employee is subject to their employer’s withholding of a portion of gross wages that includes salary, commission, tips, bonuses, sick pay, some fringe benefits, and accident disability payments (except not for worker’s compensation payments). Payments not made in cash, such as lodging or food, are considered wages. Their cash value must be estimated and included in gross wages.

Employer Contributions

Employers deposit their employees’ SUI withholding amount to the state’s UC Trust Fund. Additionally, a record of each company’s contributions and benefits paid out for their claims is kept for each company. Annual calculations determine the amount of funds remaining, or the shortfall, in each company’s reserve account. After two or three years of data is collected, adjustments might made to the rate charged for an employer depending on the historical records of the reserve account.

Here is detailed guidance on managing Pennsylvania’s SUI tax responsibilities effectively and ensuring compliance with Pennsylvania’s UC regulations in 2024.

Understanding SUI Tax in Pennsylvania

Under Pennsylvania unemployment compensation (UC) law, for 2024, employees of all classes have 0.07% of their gross taxable wages withheld for SUI. This is up from 0.06% in 2022.

For employers, Pennsylvania has a four-tiered system for UC tax rates: 1) new employer rates, 2) standard rates, 3) computed (experience-based) rates, and 4) delinquency rates.

The PA unemployment tax rate 2024 for experience-based calculations ranges from 1.4190% to 10.3734% (up from 1.2905% to 9.9333%).

Determining Your SUI Tax Rate

For employers, the Pennsylvania SUI tax 2024 depends on their time in business, the amount of employee data collected, the amount contributed to the SUI fund, the amount paid in unemployment compensation, and whether any delinquent payments are due.

SUI Tax Rate for New Employers

Rates for new employers are 3.5% for all new employers, except for construction companies, which have a new employer rate of 9.7%. These rates are increased (or decreased) by the statewide surcharge adjustment, calculated every five years, currently a positive 9.2%.

In 2024, the SUI tax rate for all new construction companies (including the positive 9.2% surcharge) is 10.592%.

In 2024, the SUI tax rate for all other new companies (including the positive 9.2% surcharge) is 3.8220%.

These rates are multiplied by the gross taxable wages paid to determine a company's UC liability.

Standard Rate

A standard rate is charged to companies that do not have substantial activity for an experience-based rating. The 2024 surcharge is 9.2% added to the basic rate and there is a 0.60% additional contribution.

For companies with a positive or zero balance in their reserve account, the standard rate (including the surcharge and additional contribution) is 6.4968%.

The standard rate (including the surcharge and additional contribution) for companies with a negative balance in their reserve account is 10.6464%.

Computed (Experienced-Based) Contribution Rate

The experienced-based contribution rate is a complex calculation that uses six factors to add them up and create an employer’s contribution rate. The factors used are the reserve ratio, benefit ratio, state adjustment, surcharge adjustment, additional contribution, and interest.

Employers with more unemployment claims pay more than those with a stable workforce and lower unemployment claims.

Delinquency Contribution Rate

The penalty for the delinquency contribution is a rate that is 3% higher than what the employers would normally have to pay.

It is possible to file an appeal for being assigned the delinquency rate if it is appealed within 90 days of the mailing date of the rate notice letter.

For the appeal to succeed, you must file any outstanding registration documents and quarterly tax reports. You must either pay the balance due in full or have a payment plan approved by the Office of Unemployment Compensation. The delinquency rate will be re-applied retroactively if you fail to make on-time payments for your approved plan.

Compliance and Reporting

The requirements for SUI tax reporting and payment in Pennsylvania include these deadlines and necessary forms:

• Form UC-2 - Employer’s Report for Unemployment Compensation: Employers use this form to report wages paid to employees during each calendar quarter.
• Form UC-2A - Employer’s Quarterly Report of Wages Paid to Each Employee: Employers use this form to report wages for each employee covered by the SUI program.
• Form UC-2B: Employers use this form to report any changes related to their business.
  
  

Filing deadlines: First quarter April 30, 2024. Second quarter July 31, 2024. Third quarter October 31, 2024. Fourth quarter January 31, 2025.

Because the penalty for delinquent payments is substantial, it is best to work with a qualified payroll company to ensure compliance and avoid common mistakes such as late filing.

Managing SUI Costs

For businesses to manage their SUI tax compliance PA effectively, it is important to maintain a stable workforce and understand the impact of claims against their account. Accurate record-keeping and proactive tax planning are important.

Navigating Changes and Challenges

Recent changes to Pennsylvania’s SUI tax system that businesses need to be aware of include an increase in the employee withholding rate from 0.06% to 0.07%. The surcharge is up to 9.2% from 5.4%. The employer addition contribution is up to 0.60% from 0.05%. The state adjustment factor of 0.75% remains unchanged. There is no interest factor.

Businesses can stay informed and adapt to these changes by referring to the Office of Unemployment Compensation resources, tax highlights, and the Employer Quick Guide.

Conclusion

Managing SUI tax in Pennsylvania is challenging. The calculations are complex and require understanding many SUI tax PA rules and compliance requirements for business success. A mistake may be costly.

Contact Exact Payroll for expert assistance with your SUI tax management and compliance needs, sign up for updates on payroll tax changes, or attend a webinar on SUI tax strategies.