Employer's Guide to Unemployment Insurance Tax in Wisconsin

Everything employers need to know about paying unemployment insurance taxes in Wisconsin.

By , Contributing Author

If your small business has employees working in Wisconsin, you'll need to pay Wisconsin unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In Wisconsin, state UI tax is just one of several taxes that employers must pay. Other important employer taxes, not covered here, include federal UI tax, and state and federal withholding taxes.

Different states have different rules and rates for UI taxes. Here are the basic rules for Wisconsin's UI tax.

Register With the Department of Workforce Development

As a Wisconsin employer subject to UI tax, your small business must establish a Wisconsin UI tax account with the Wisconsin Department of Workforce Development (DWD). You should register for an account as soon as you think you might be liable for UI taxes (see below). You can register for an account with the DWD either online or on paper. Following registration, if your business is determined to be liable for UI taxes, you'll be issued an Unemployment Account Number.

To register online, use the DWD's UI Employer Online Services. To register on paper, use Form UCT-1-E, Wisconsin Employer Report. Blank forms are available for download from the Forms and Publications section of the DWD website. There is no fee to register your business with the DWD.

Note: To establish your Wisconsin UI tax account, you'll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.

Rules for UI Tax Liability

As a for-profit employer in Wisconsin, you generally are liable for state UI taxes if you meet any of the following conditions:

  • you paid wages of $1,500 or more in a quarter in any calendar year
  • you employed one or more individuals for some part of a day in 20 or more weeks in any calendar year (the weeks need not be consecutive and part-time employees must be included in the employee count)
  • you've taken over part or all of the business of an employer already covered under the unemployment compensation law, or
  • you've paid any wages for Wisconsin employment and you have a liability for that year under the Federal Unemployment Tax Act (FUTA).

The first three listed items are effectively the same rules that apply for liability under FUTA. Therefore, if you are liable under FUTA, you're likely also liable for Wisconsin UI taxes, and vice versa. Different rules, not covered here, apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.

One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.

Wage Base and Tax Rates

UI tax is paid on each employee's wages up to a maximum annual amount. In recent years, that amount, known as the taxable wage base, has held steady at $14,000 in Wisconsin. However, it's always possible the amount could change.

The state UI tax rate for new employers also is subject to change from one year to the next. The rate recently has decreased. Unlike other states, Wisconsin has a two-tiered rate system. New employers with payroll less than $500,000 pay a lower rate than those with payroll of $500,000 or more. In recent years, the lower-tier rate has been between 3.25% and 3.60%, and the higher-tier rate has been between 3.40% and 4.10%. The latter rates apply to new employers in most industries. New employers in the construction industry are subject to a significantly higher rate.

Established employers are subject to a lower or higher rate than new employers depending on an "experience rating." This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.

For the latest wage base and tax rate information, check the DWD website.

File Quarterly UI Tax Reports and Payments

In Wisconsin, UI tax reports and payments are due by the close of the month following the end of the calendar quarter. In other words:

Reporting Quarter

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

File Reports

Due April 30

Due July 31

Due Oct 31

Due Jan 31

First reporting day

March 20

June 20

September 20

December 20

Larger employers must file electronically (online). Smaller employers (less than 25 employees) may file on paper. Once you are required to file online, you must continue to do so in the future.

To file online, use the Tax and Wage Reporting System, which you access through the DWD's UI Employer Online Services website. To file on paper, use Form UCT-101, Quarterly Contribution Report, and Form UC-7823, Quarterly Wage Report. You can download blank forms from the Forms and Publications section of the DWD website.

You can pay online using Electronic Funds Transfer (EFT) via either Automated Clearing House (ACH) debit or ACH credit transactions. You can also pay by check or money order.

You must file a quarterly report even if you didn't have payroll in the quarter. You will be subject to a penalty if you fail to file.

Post a Notice (Poster)

You are required to post a notice (poster) regarding state unemployment claims in a conspicuous place for all employees. The poster provides basic information for employees on when and how to apply for Wisconsin unemployment benefits. You can download a notice that meets all legal requirements (Form UCB-7-P, Notice to Employees) from the Workplace Posters section of the DWD website.

Do Not Misclassify Employees as Independent Contractors

Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it's important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.

Using Payroll Service Companies

You may decide that it's easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.

Additional Information

This article touches on only the most basic elements of Wisconsin UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and DWD websites for the latest information. The DWD also has an online publication, Wisconsin Unemployment Insurance: Handbook for Employers, that you can access from the DWD website. In addition to state UI tax, employers have other responsibilities not covered in this article such as federal UI tax, state and federal withholding taxes, required reporting of new hires, and required retention of employee records. You can get more information about other small business tax issues in other articles on Nolo.com.

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