At the end of each year, and occasionally mid-year, state agencies send tax rate notices to the employers with updates to their Unemployment Insurance (UI), State Disability Insurance (SDI), or other employer tax rates.
These updates ensure your payroll taxes are calculated correctly based on your business’s current experience rate.
To keep your payroll accurate, please send us your new tax rate notice via the message center, and we’ll take care of updating it for you.
Why should I do this?
When you have employees (such as yourself), you must pay federal and state unemployment taxes.
As an employer, it's your responsibility to ensure you update your state tax rates in the payroll software every year. The payroll software will then withhold the correct amount of payroll taxes and pay it to the state agencies. An underpayment of taxes could result in penalties.
What does the tax rate notice look like?
Each state issues its own version of a tax rate notice and notices may be issued at varying times of the year, typically at the start of the year. You may receive it by mail or through your state’s online employer portal.
While formats vary, the notice usually includes:
- Your business name and state account number
- The new unemployment insurance (UI) or state payroll tax rate
- The effective date (often January 1 of the new year)
- Your contribution rate or experience rate (based on prior payroll filings)
- Filing frequency or payment schedule
Here are examples from the California EDD:
What do I need to do when I receive the notice?
When you receive a state tax rate notice, whether it arrives at year-end or mid-year, please send it to us right away so we can make sure your payroll taxes are calculated correctly.
Here’s how:
- Go to your Collective Dashboard.
- Send us a message with the subject line: “Attn: Employer Registration Team.”
Attach a copy of your state tax rate notice.
Our team will review the notice and update your tax rates for you. No additional action is needed on your end.
My tax rate is the same as last year - What should I do?
Yes, this can happen! Sometimes, your new year tax rates are the same as the previous year. The state will still send you a notice to confirm your rate, even if nothing has changed.
If your notice shows the same rate as last year, there’s no action required. Just upload the document to your Collective documents with the document type “Employer Registration Documents”. No additional updates are required.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.