SUTA and FUTA are both payroll taxes that help fund unemployment insurance in the United States. They are part of the broader unemployment insurance system designed to provide temporary financial assistance to workers who have lost their jobs through no fault of their own.

SUTA (State Unemployment Tax Act) is a state-level tax that employers pay to fund the unemployment insurance system in their state. It requires employers to pay a payroll tax directly into each states unemployment fund. Typically, it is only paid by employers, but some states require employers and employees to contribute. SUTA may also be called State Unemployment Insurance (SUI) or Reemployment Tax. The taxable wage base, SUTA tax rate, and other requirements for SUTA tax can vary by state.

FUTA (Federal Unemployment Tax Act) is a federal tax that employers pay to fund the federal unemployment insurance system. The FUTA tax rate is a flat rate of 6% on the first $7,000 of each employee’s taxable wages. However, many employers receive a credit against their FUTA tax liability for the SUTA taxes they pay, which can reduce their overall tax burden. Compliance with both SUTA and FUTA requirements is important for employers.