How Do State Payroll Taxes Vary in the US? (2025 Guide)

In the US, every state brings its own mix of income tax rules, unemployment insurance rates, and workers’ comp requirements. If you’re running payroll across state lines, those overlapping codes and ever-changing obligations can lead to missed filings, unexpected fines, and endless manual catch-ups.

Even seasoned HR and payroll teams can struggle to track each state’s unique deadlines and deduction mandates.

In this 2025 state-by-state payroll tax guide, you get the latest rates, filing tips, and deduction breakdowns for all 50 states to stay ahead of every update.

With Deel as your source of truth for US and global payroll, you’ll eliminate guesswork, ensure iron-clad compliance, and reclaim hours for strategic growth.

To bring some clarity to US payroll and tax regulations, we’ve created a state-by-state guide that introduces you to the basics of each state’s laws. Explore the guide here.

Alabama

In Alabama, employers pay State Unemployment Insurance (SUI) at experience-rated rates (new employers 2.7%; established rates 0.2%–6.8% on the first $8,000 USD of wages, up to $544 per employee) and withhold personal income tax at progressive rates of 2%–5%.

Workers’ compensation coverage isn’t required until an employer has five or more Alabama-based employees, and certain municipalities may levy additional occupational or business-license taxes.

Alaska

Alaska has no state income tax withholding. Employers instead withhold federal taxes, and both employer and employee contribute to the State Unemployment Insurance program (2025 taxable wage base $51,700; employee 0.50%; employer 1%–5.9% based on experience).

Employers must carry workers’ compensation insurance from the first hire, and while there’s no municipal payroll tax, localities may impose sales-tax levies or nonprofit thresholds for payroll-tax liability.

Arizona

Employers must contribute to SUI at a new-employer rate of 2% for the first two years and an established-business rate of 0.04%–9.72% on the first $8,000 of each employee’s annual wages, with quarterly filing and payment through Arizona’s Unemployment Tax and Wage System (EFT).

They withhold personal income tax at a flat 2.5% rate on gross taxable wages and must carry workers’ compensation insurance via a qualified commercial carrier. Arizona has no local income tax withholding, and while IRC §501(c)(3) nonprofits are exempt from withholding, they may voluntarily participate in the state UI program.

Arkansas

Employers pay payroll taxes, including SUI on the first $7,000 of each employee’s wages at rates set annually. They withhold progressive personal income tax based on the AR4EC withholding table. Workers’ compensation insurance is required once an employer has three or more Arkansas-based employees.

While the state administers over 300 local taxes and distributes them to municipalities, 501(c)(3) nonprofits are exempt from most state taxes but must participate in unemployment insurance for workers who have lost their jobs.

California

California employers fund unemployment insurance at rates set by the Employment Development Department, withhold progressive personal income tax, deduct State Disability Insurance (SDI) from employee wages, and pay a 0.1% Employment Training Tax (ETT).

Workers’ compensation coverage is mandatory regardless of workforce size. There are no municipal payroll taxes, though some cities may impose business-license fees.

Colorado

Colorado employers pay Unemployment Insurance (UI) on wages if they meet the state’s threshold (e.g., $1,500 in a quarter), with rates determined by the Department of Labor and Employment, and withhold a flat 4.25% personal income tax.

Certain cities (Denver, Aurora, etc.) levy Occupational Privilege Taxes (OPT) per employee, and workers’ compensation insurance is required for all employers. Employers file and pay through state online portals, with quarterly UI and PIT due dates aligned to quarter- and month-end schedules.

Connecticut

Employers fund state unemployment insurance at experience-rated rates and withhold progressive personal income tax ranging from 2% to 6.99% on employee wages. Employees contribute 0.5% of wages to the Paid Family and Medical Leave (PFML) program, while employers cover workers’ compensation insurance.

Connecticut prohibits municipal payroll taxes. State payroll obligations are administered by the Department of Revenue Services, the Department of Labor, and the Paid Leave Authority.

District of Columbia

DC employers pay unemployment insurance at rates starting around 2.7%, with individual rates set based on business history, and withhold personal income tax on a progressive schedule beginning at 4%.

They also remit 0.75% of wages for Paid Family Leave (PFL) and must carry workers’ compensation insurance for all employees. No additional local payroll taxes apply beyond these state-level requirements, which are managed via the DC online portals.

Florida

Employers contribute reemployment assistance (UI) at rates ranging from 0.10%–5.4% on the first $7,000 of each employee’s wages and must provide workers’ compensation insurance for all employees. Florida does not impose a state income tax or disability‐insurance deductions, and municipalities are prohibited from levying local payroll taxes.

Georgia

Georgia employers pay SUI through the Department of Labor, with rates set annually, and withhold a flat personal income tax from employee wages. All businesses must carry workers’ compensation insurance once they have three or more employees, and there are no local income tax or disability tax requirements.

Hawaii

In Hawaii, employers remit unemployment insurance (UI) at rates of 0.0%–5.6% on wages up to $62,000 and withhold state personal income tax under a progressive scale, plus temporary disability insurance (TDI). Workers’ compensation insurance is mandatory for all employers, and no local jurisdictions impose additional payroll taxes.

Idaho

Idaho employers fund UI at rates from 0.18%–5.4% on the first $55,300 of each employee’s wages and withhold state income tax at a flat rate of 5.695%. Employers must carry workers’ compensation coverage from the first hire, and the state has no local payroll taxes.

Illinois

Employers in Illinois contribute UI at 3.65%–7.85% on the first $13,916 of wages and withhold personal income tax at a flat 4.95%. Workers’ compensation insurance is required for all employers, and Illinois does not allow municipalities to impose additional employer taxes.

Indiana

Employers must remit state unemployment insurance (UI) contributions through the Indiana Unemployment Insurance online portal at rates set annually by the Department of Workforce Development.

They withhold personal income tax from each employee’s wages—including a flat 3.05% state rate plus any county-level local income taxes—remitting withheld amounts via Indiana’s online portal with annual and monthly filings due within 30 days (early filer payments within 20 days), and penalties up to 10% for late payments.

Workers’ compensation coverage is mandatory for every employer from the first Indiana hire, and nonprofit organizations with employees remain subject to these payroll taxes.

Iowa

Iowa employers pay state unemployment insurance based on one of eight Contribution Rate Tables, ranging from 0% to 9% in Table 1 down to 0%–7% in Table 8, with all private employers slated to use Table 8 rates in 2025 and quarterly UI filings via the myIowa UI portal.

They withhold personal income tax at graduated rates of 4.4%–5.7%, choosing a filing frequency (quarterly, monthly, or semi-monthly) based on total annual tax liability, and remit via the Iowa Department of Revenue’s online system. Workers’ compensation insurance is required for every Iowa employer, typically purchased from a qualified commercial carrier.

Kansas

Kansas employers contribute to state unemployment insurance at rates between 0.1% and 6.65% on the first $14,000 of each employee’s wages (new non-construction employers start at 1.75%; construction at 5.55%), filing and paying quarterly on April 30, July 31, October 31, and January 31.

They withhold personal income tax at rates from 3.1%–5.7% on resident wages, remitting via the Kansas Department of Revenue’s online portal according to their chosen schedule (annual to quad-monthly. Workers’ compensation coverage is mandatory from the first Kansas hire and must comply with state regulations.

Kentucky

Kentucky employers remit state unemployment insurance at experience-based rates of 0.3%–9% on the first $11,700 of wages (new employers at 2.7%) with quarterly payments due April 30, July 31, October 31, and January 31, and a $25 late-payment penalty plus interest on unpaid balances.

They withhold personal income tax at a flat 4% on employee wages (with a $3,160 standard deduction), collecting Form K-4 from each worker and filing annually, quarterly, monthly, or semi-monthly based on total annual withholding. Workers’ compensation insurance is required for every Kentucky employer, and reciprocal agreements exempt withholding for employees living in certain neighboring states.

Louisiana

Employers in Louisiana must pay state unemployment insurance on the first $7,700 of each employee’s wages at rates ranging from 0.09% to 6.2%, with quarterly filing and payment handled through the state’s online portals. They also withhold a flat 3.0% personal income tax on all wages for 2025 and later, filing monthly, quarterly, or semi-monthly based on total taxes withheld.

Workers’ compensation insurance is required for every employer, regardless of size, and must be obtained from a qualified commercial carrier. While local jurisdictions do administer various business licenses and other taxes, they do not impose additional payroll-specific levies beyond state requirements.

Maine

Maine employers contribute to unemployment insurance at rates between 0.30% and 6.27% on the first $12,000 of each employee’s wages (new employers at 2.41%), with quarterly reports due at the end of each quarter via the ReEmployME portal. They also withhold personal income tax on employee wages at a progressive 5.8%–7.15% rate, remitting through Maine’s online system either electronically or by mail.

Workers’ compensation coverage is mandatory for all employers, with policies purchased from a qualified commercial carrier. In addition, employers with at least one employee must begin withholding and remitting Paid Family and Medical Leave contributions (1.0% of wages for large employers; 0.5% for small) with quarterly filings.

Maryland

Employers in Maryland pay state unemployment insurance on the first $8,500 of each employee’s wages at experience-rated rates set annually by the Department of Labor. They withhold personal income tax on a progressive scale of 2.00%–5.75% and remit both UI and withholding through the Maryland OneStop portal.

Workers’ compensation coverage is mandatory for all employers, with premiums based on industry classification and payroll. Local jurisdictions do not impose additional wage-based payroll taxes, though Baltimore City levies a 1% service-business tax unrelated to withholding.

Massachusetts

Massachusetts employers contribute to state unemployment insurance at rates determined by their experience (typically 0.94%–7.34% on the first $15,000 of wages) and withhold a flat 5% personal income tax. Payments are filed quarterly through the MassTaxConnect system.

All employers must also cover workers’ compensation insurance and remit a 0.54% employer assessment to the state’s Paid Family and Medical Leave trust. No municipal or local payroll taxes apply beyond these state requirements.

Michigan

In Michigan, employers pay state unemployment insurance on the first $9,500 of each employee’s wages at rates ranging from 0.06% to 10.3% based on experience. They withhold personal income tax at a flat 4.25% rate and remit both UI and withholding via Michigan Treasury Online.

Workers’ compensation insurance is required for all employers, with premiums varying by classification and payroll. No local jurisdictions impose additional payroll-specific taxes.

Minnesota

Minnesota employers fund unemployment insurance at experience-based rates (0.1%–9% on the first $37,000 of wages) and withhold personal income tax on a progressive scale of 5.35%–9.85%. Filings and payments are made quarterly through the Minnesota Unemployment Insurance system and e-Services portal.

All Minnesota employers must maintain workers’ compensation coverage, and while cities like Minneapolis and St. Paul require business license fees.

Mississippi

Employers in Mississippi pay state unemployment insurance on the first $14,000 of each employee’s wages at rates between 0.1% and 5.4% and withhold income tax on a progressive scale of 3%–5%. Both UI and withholding are remitted via the Mississippi Department of Employment Security online portal.

Workers’ compensation insurance is mandatory for businesses with five or more employees. Municipalities may require business license filings, but no additional payroll-specific taxes are imposed.

Missouri

Missouri employers contribute to unemployment insurance at rates from 0.1% to 6.0% on the first $11,000 of wages and withhold personal income tax on a progressive scale of 1.5%–5.4%. Payments are filed quarterly through the Department of Labor and Industrial Relations and the Department of Revenue.

Workers’ compensation coverage is required for all employers, and St. Louis imposes a small business-license tax unrelated to payroll withholding.

Montana

Montana employers pay unemployment insurance at experience-rated rates (0%–5.4% on the first $40,800 of wages) and withhold personal income tax on a progressive scale of 1%–6.75%. Filings for both are due quarterly through the Montana Department of Labor and Industry and the Department of Revenue.

All employers must carry workers’ compensation insurance. Local jurisdictions do not impose additional payroll taxes.

Nebraska

Nebraska employers fund unemployment insurance at rates ranging from 0.03% to 5.4% on the first $9,000 of each employee’s wages and withhold personal income tax on a progressive scale of 2.46%–6.84%. Both UI and withholding are filed quarterly via the Nebraska Department of Labor and the Department of Revenue e-services portal.

Workers’ compensation insurance is mandatory for all employers. Omaha levies an occupational tax on certain businesses, but no general local wage-based payroll taxes exist.

Nevada

With no state income tax, Nevada employers focus on unemployment insurance—paying experience-rated rates of 1.5%–5.4% on the first $33,700 of wages—and file quarterly through the Unemployment Insurance Division portal.

Workers’ compensation coverage is required for all employers. Clark County and other local jurisdictions may require general business-license fees, but no additional payroll taxes apply.

New Hampshire

New Hampshire has no wage withholding, but employers contribute to unemployment insurance at rates from 0.2% to 5.4% on the first $13,200 of wages, filing quarterly through the ReEmployUS system. Interest and dividends taxes are being phased out by 2027.

Workers’ compensation insurance is mandatory for every employer. No municipalities levy payroll-specific taxes.

New Jersey

New Jersey employers pay unemployment insurance at rates of 0.3%–5.4% on the first $42,800 of wages and withhold personal income tax on a progressive scale of 1.4%–10.75%. Filings are made quarterly via the NJ Business Gateway portal.

Employers also remit a small Workforce Development Surcharge and must maintain workers’ compensation coverage. Jersey City imposes a payroll expense tax on large employers, but no other local wage taxes apply.

New Mexico

In New Mexico, employers contribute to unemployment insurance at rates from 0.1% to 5.4% on the first $29,000 of wages and withhold personal income tax on a progressive scale of 1.7%–5.9%. Payments are filed quarterly via the New Mexico Workforce Connection and Taxation and Revenue Department portals.

Workers’ compensation coverage is required for all employers. Albuquerque imposes a gross-receipts fee tied to payroll, but no local wage-withholding taxes exist.

New York

New York employers pay unemployment insurance at experience-rated rates of 1.5%–7.9% on the first $12,300 of wages and withhold personal income tax on a progressive scale of 4%–10.9%. They also remit Metropolitan Commuter Transportation Mobility Tax (0.11%–0.34%) for NYC-area employers and New York City income taxes of 3.078%–3.876%.

Workers’ compensation insurance is mandatory statewide, and all filings are done through the Department of Labor and the Department of Taxation and Finance online systems. NY SDI requires a flat $0.60 weekly contribution per employee, with benefits capped at $170 weekly for up to 26 weeks.

North Carolina

North Carolina employers fund unemployment insurance at rates from 0.06% to 5.4% on the first $28,000 of wages and withhold personal income tax at a flat 4.75%. Both are filed quarterly via the eNC-US portal.

Workers’ compensation coverage is required for all employers. No municipalities impose additional payroll taxes.

North Dakota

North Dakota employers contribute to unemployment insurance at rates of 0.1%–5.4% on the first $45,900 of wages and withhold personal income tax on a progressive scale of 1.1%–2.9%. Filings are due quarterly through the Workforce Safety and Insurance and Tax Commissioner portals.

Workers’ compensation insurance is mandatory for every employer. No local jurisdictions levy payroll taxes.

Ohio

Ohio employers pay unemployment insurance at experience-rated rates of 0.3%–9.4% on the first $9,000 of wages and withhold personal income tax based on local jurisdiction rates (0.765%–4.797%). Filings for both are done quarterly via the Ohio Business Gateway.

Workers’ compensation coverage is required for all employers. Municipal income taxes vary by city (up to 3%), withheld by employers when applicable.

Oklahoma

Oklahoma employers fund unemployment insurance at rates of 0.2%–5% on the first $24,000 of wages and withhold personal income tax on a progressive scale of 0.25%–5%. Payments are filed quarterly via the Oklahoma Employment Security Commission and Tax Commission portals.

Workers’ compensation insurance is mandatory from the first hire. Oklahoma City charges a gross-receipts tax, but no local wage-withholding taxes apply.

Oregon

Oregon employers contribute to unemployment insurance at rates of 0.1%–5.4% on the first $42,900 of wages and withhold personal income tax on a progressive scale of 4.75%–9.9%. Both filings are done quarterly through the Oregon Employment Department and the Department of Revenue e-services.

Workers’ compensation coverage is required for all employers. Portland requires a business license fee but no local payroll taxes.

Pennsylvania

Pennsylvania employers pay unemployment insurance at rates of 0.3%–5.4% on the first $10,000 of wages and withhold personal income tax at a flat 3.07%. Filings are due quarterly via the Keystone Login portal.

Workers’ compensation insurance is mandatory for all employers, and local jurisdictions collect earned income taxes of 0.5%–3.9% based on employee residence or work location.

Puerto Rico

Puerto Rico employers fund unemployment insurance at rates of 0.2%–5.4% on the first $7,000 of wages and withhold personal income tax at a flat 7%. Filings are made quarterly via the Puerto Rico Department of Labor and Treasury e-services.

Workers’ compensation coverage is required for all employers, and municipalities may impose property or business taxes, but no payroll-withholding taxes.

Rhode Island

Rhode Island employers contribute to unemployment insurance at rates of 0.1%–5.4% on the first $25,400 of wages and withhold personal income tax on a progressive scale of 3.75%–5.99%. Filings are due quarterly via the ReEmployRI and Division of Taxation online portals.

Workers’ compensation insurance is mandatory for all employers. No local wage-withholding taxes exist.

South Carolina

South Carolina employers pay unemployment insurance at rates of 0.06%–5.4% on the first $14,000 of wages and withhold personal income tax on a progressive scale of 0%–7%. Both are filed quarterly via the Department of Employment and Workforce and the Department of Revenue e-services.

Workers’ compensation insurance is required for employers with four or more employees. No municipal payroll taxes apply.

South Dakota

With no state income tax, South Dakota employers focus on unemployment insurance—paying 1%–5.4% on the first $15,000 of wages—and file quarterly through the Labor Department’s portal.

Workers’ compensation coverage is mandatory for all employers. Some cities require business license fees, but no payroll taxes apply.

Tennessee

Tennessee has no wage withholding, but employers pay unemployment insurance at rates of 0.1%–5.4% on the first $7,000 of wages, with quarterly filings via the Department of Labor and Workforce Development.

Workers’ compensation insurance is mandatory for all employers. No local jurisdictions impose payroll-specific taxes.

Texas

Texas employers contribute to unemployment insurance at rates of 0.31%–6.31% on the first $9,000 of wages and carry workers’ compensation insurance (though elective for some industries). Filings are made quarterly via the Texas Workforce Commission portal.

There is no state income tax or local wage withholding, though certain cities levy franchise taxes on business receipts.

Utah

Utah employers pay unemployment insurance at rates of 0.2%–5.4% on the first $43,800 of wages and withhold personal income tax at a flat 4.85%. Both are filed quarterly via the Utah Department of Workforce Services and Tax Commission portals.

Workers’ compensation coverage is required for all employers. No local payroll taxes apply.

Vermont

Vermont employers contribute to unemployment insurance at rates of 0.1%–5.4% on the first $16,600 of wages and withhold personal income tax on a progressive scale of 3.35%–8.75%. Both filings are completed quarterly through the Department of Labor and Department of Taxes online systems.

Workers’ compensation insurance is mandatory for every employer, and Burlington requires a small gross-receipts tax not based on wages.

Virginia

Virginia employers fund unemployment insurance at rates of 0.1%–6.2% on the first $8,000 of wages and withhold personal income tax on a progressive scale of 2%–5.75%. Filings for both are due quarterly via the Virginia Employment Commission and Department of Taxation online portals.

Workers’ compensation coverage is mandatory from the first hire. No local payroll taxes are imposed.

Washington State

Washington State employers pay unemployment insurance at rates of 1.15%–5.4% on the first $62,500 of wages and remit Paid Family and Medical Leave premiums (employee 0.4%; employer 0%–0.4%). Both are filed quarterly via the Employment Security Department portal.

Workers’ compensation insurance is mandatory for all employers, and Seattle levies a head tax on large employers based on headcount rather than wages.

West Virginia

West Virginia employers contribute to unemployment insurance at rates of 0.2%–5.4% on the first $12,000 of wages and withhold personal income tax on a progressive scale of 3%–6.5%. Filings are made quarterly via the WorkForce WV and Tax Division portals.

Workers’ compensation coverage is required for every employer. No local wage-withholding taxes apply.

Wisconsin

Wisconsin employers pay unemployment insurance at rates of 0.1%–5.4% on the first $14,000 of wages and withhold personal income tax on a progressive scale of 3.54%–7.65%. Both are filed quarterly via the Department of Workforce Development and the Department of Revenue e-services.

Workers’ compensation insurance is mandatory for employers with one or more employees, and Milwaukee imposes a business-privilege tax on gross receipts rather than wages.

Wyoming

With no state income tax, Wyoming employers focus on unemployment insurance—paying experience-rated rates of 0%–5.4% on the first $7,000 of wages—and file quarterly via the Unemployment Insurance Division portal.

Workers’ compensation coverage is required for all employers, and no local jurisdictions impose payroll taxes.

Additional state tax guides

• Supplemental Tax Rates by State (2025)
• State Unemployment Insurance (SUI) Rates by State (2025)
• State Income Taxes Explained: Your 2025 Guide
• State Tax Reciprocity: Filing Your Taxes Made Easy

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