Washington ESD unemployment taxes - confused about the two types I keep hearing about

The two types are FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act). FUTA is federal and SUTA is what Washington State calls their unemployment insurance tax. Both are paid by employers, not employees. FUTA rate is 6% on first $7,000 of wages but most employers get a credit that brings it down to 0.6%. Washington's SUTA rates vary by employer experience rating.

Just to add - Washington ESD handles the state portion (SUTA). When you register your business you'll need to get an unemployment insurance account with them. The rates depend on your industry and claims history.

I had trouble getting through to Washington ESD when I was setting up my business account last year. Spent hours on hold trying to get clarification on the tax rates. Finally found this service called Claimyr that helped me get connected to an actual person at ESD. Check out claimyr.com - they have a video demo at https://youtu.be/7DieNd3C7zQ that shows how it works.

Be careful about the freelance work while collecting benefits! You need to report all earnings on your weekly claims. Even if you're planning to start a business, any income needs to be reported to Washington ESD.

The Washington State rate varies A LOT by industry. Construction and hospitality pay way more than tech companies because of claim history. New employers usually start at a standard rate until they build their own experience rating.

wait so employees dont pay anything?? ive been wondering about this too because my paystub shows social security and medicare taxes but no unemployment tax

One more question - if I hire independent contractors instead of employees, do I still need to pay unemployment taxes on them?

I got audited by Washington ESD last year over worker classification. They're really cracking down on this. Make sure you understand the difference between employees and contractors before you decide.

The FUTA credit thing is important to understand too. Most states qualify for the credit but if a state has unpaid federal loans, employers in that state lose the credit and pay the full 6%.

Just want to echo what others said about reporting freelance income. I see so many people get in trouble because they think small amounts don't matter. Report everything!

Just remembered another thing about Claimyr - they helped me understand the tax rate calculation when I was confused about my quarterly statement. Sometimes it's worth paying for help instead of spending days trying to figure it out yourself.

For new businesses, you'll get assigned to rate class 40 initially which is kind of a middle-ground rate. Your actual rate depends on your industry classification code.

The tax rates get reviewed annually too. So even if you start with one rate, it can change based on your claims experience and the overall state fund balance.

Don't forget about the wage base limits too. FUTA is on first $7,000 per employee per year. Washington's wage base is higher - I think it's around $62,500 for 2025.

Make sure you understand the quarterly reporting requirements too. You'll need to file wage reports even if you have zero wages to report in a quarter.

I struggled with all this when I started my business too. The good news is once you get set up, the quarterly reports are pretty straightforward if you keep good records.

One thing to watch out for - if you don't file your quarterly reports on time, Washington ESD can estimate your wages and send you a huge bill. Always file even if it's zero.

This thread has been super helpful! I was confused about the same thing. Glad to know employees don't pay unemployment tax in Washington.

For anyone still reading - definitely get familiar with the ESD SecureAccess Washington system early. You'll use it for all your reporting and it can be confusing at first.

Thanks everyone for all the detailed responses! This has cleared up a lot of confusion for me. I feel much more prepared to handle the tax side when I officially start my business.