Illinois SUI Rates 2026: What Employers Pay for Unemployment Insurance

State Unemployment Insurance (SUI) is a direct employer expense in Illinois. Unlike federal income tax or Social Security, which are withheld from employee paychecks, SUI comes entirely out of the employer's pocket. Every Illinois employer with employees must pay into the state unemployment fund, administered by the Illinois Department of Employment Security (IDES).

Your SUI rate determines how much you pay per employee each year. Understanding how it works, what drives the rate up or down, and how to manage it is essential for controlling your payroll costs. This guide covers everything Illinois employers need to know about SUI rates for 2026.

Illinois SUI at a Glance

Here is a summary of the key SUI figures for Illinois employers in 2026:

New Employer Rate: 3.175%

When you first become an Illinois employer, IDES assigns you the new employer rate of 3.175%. This rate applies for your first three years of operation, until IDES has enough claims history to calculate an experience-based rate for your business.

The new employer rate is not negotiable. Every new employer in the state starts at the same rate regardless of industry, size, or projected payroll. It falls roughly in the middle of the overall rate range, reflecting the fact that IDES doesn't yet know your claims risk.

Cost Calculation

At 3.175%, the maximum SUI cost per employee per year is:

$13,271 × 3.175% = $421.35 per employee per year

Here is what that looks like for businesses of different sizes:

These figures assume each employee earns at least $13,271 during the year. If an employee earns less than the wage base (for example, a part-time or seasonal worker), you only pay SUI on their actual wages.

Experienced Employer Rates: 0.675%–6.875%

After your first three years, IDES assigns you an experience-based rate that reflects your actual unemployment claims history. This rate is recalculated annually and sent to you in a rate notice, typically in late fall for the following year.

Experienced employer rates in Illinois range from a minimum of 0.675% to a maximum of 6.875%. Where you fall depends on your benefit ratio — how much in unemployment benefits has been charged to your account relative to your taxable payroll.

The difference between the minimum and maximum rate is substantial. An employer at the minimum rate pays about $90 per employee per year, while an employer at the maximum pays about $912 — more than 10 times as much. This is one of the strongest incentives for managing your unemployment claims carefully.

The $13,271 Wage Base

The Illinois SUI taxable wage base for 2026 is $13,271. This means you pay SUI tax only on the first $13,271 of each employee's wages in a calendar year. Once an employee's year-to-date wages exceed $13,271, you stop paying SUI on that employee for the rest of the year.

This is how the wage base works in practice:

• Employee earning $50,000/year: You pay SUI on the first $13,271 only. Once they hit that threshold (typically in Q1 or Q2), SUI stops for that employee.
• Employee earning $13,271 or less: You pay SUI on their full wages for the year.
• Part-time employee earning $8,000/year: You pay SUI on the full $8,000, since they never reach the wage base cap.

The wage base can change from year to year. IDES adjusts it periodically based on statewide average wages. Always verify the current wage base at the start of each year.

No ETT in Illinois

Unlike California, which charges an Employment Training Tax (ETT) on top of SUI, Illinois does not have an Employment Training Tax. Your SUI contribution is the only state unemployment-related tax you pay as an Illinois employer.

This simplifies your payroll calculations. When budgeting for state unemployment costs in Illinois, you only need to account for SUI — there are no additional surcharges, training taxes, or supplemental assessments layered on top (though IDES may occasionally apply a fund-building surcharge if the trust fund balance is critically low).

Total Annual Cost Per Employee

The following table shows the total annual SUI cost per employee at various rate levels, assuming each employee earns at least $13,271:

For a business with 15 employees, the annual SUI cost at the minimum rate would be about $1,343, while the same business at the maximum rate would pay about $13,686. That is a difference of over $12,000 per year — a meaningful line item for any small business budget.

How Experience Rating Works

Illinois uses a benefit ratio system to determine experienced employer SUI rates. The benefit ratio measures how much in unemployment benefits has been charged to your account compared to your taxable payroll over time.

The Benefit Ratio Formula

IDES calculates your benefit ratio as:

Benefit Ratio = Total Benefits Charged to Your Account ÷ Total Taxable Wages Over the Same Period

A higher benefit ratio means your former employees have drawn more unemployment benefits relative to your payroll, which results in a higher SUI rate. A lower benefit ratio means fewer claims, leading to a lower rate.

How IDES Assigns Your Rate

Each year, IDES calculates your benefit ratio and maps it to a rate on the state's rate schedule. The rate schedule contains multiple rate classes, and your benefit ratio determines which class you fall into. The key factors are:

• Benefits charged: Unemployment benefits paid to your former employees that are charged to your account.
• Taxable payroll: Your total wages subject to SUI over the measurement period.
• Rate schedule in effect: IDES may use different rate schedules (A through F) depending on the health of the state trust fund. A stronger trust fund can mean a more favorable schedule with lower rates overall.

IDES sends employers an annual rate notice, usually in the fourth quarter, that lists your assigned rate for the following year. Review this notice carefully. If you believe your rate is incorrect, you have the right to protest within 30 days.

IDES Trust Fund Status

The Illinois Unemployment Insurance Trust Fund is the pool of money from which unemployment benefits are paid. The health of this fund directly affects employer SUI rates.

When the trust fund is well-funded, IDES can use a more favorable rate schedule, meaning lower rates for all employers. When the fund is depleted — as happened during and after the COVID-19 pandemic — IDES may shift to a less favorable rate schedule, pushing rates higher across the board.

Illinois borrowed heavily from the federal government during 2020–2021 to cover the surge in unemployment claims. The state has been working to rebuild its trust fund balance, and the rate schedule in effect for 2026 reflects the current fund status. Employers should monitor trust fund health because it can change your rate even if your own claims experience stays the same.

You can check the current trust fund balance and rate schedule information on the IDES website.

How Unemployment Claims Affect Your Rate

Not all unemployment claims are treated equally when it comes to your SUI rate. Understanding what gets charged to your account and what does not is important for managing your rate.

What Gets Charged to Your Account

• Layoffs: If you lay off an employee and they collect unemployment, those benefits are charged to your account.
• Termination without misconduct: If you fire an employee for poor performance (but not willful misconduct), the benefits are typically charged to you.
• Reduction in hours: If you significantly reduce an employee's hours, they may qualify for partial unemployment benefits that are charged to your account.

What Typically Does Not Get Charged

• Voluntary quit: If an employee voluntarily resigns without good cause attributable to the employer, benefits are generally not charged to your account.
• Discharge for misconduct: If you terminate an employee for documented willful misconduct, the claim is usually denied or not charged to your account.
• Seasonal or temporary employment: In some cases, benefits paid to workers in temporary positions may be handled differently.

The key takeaway is that documentation matters. When you terminate an employee for misconduct, having clear written records (warnings, performance reviews, incident reports) makes it far more likely that the claim will not be charged to your account. Without documentation, IDES may side with the claimant.

Strategies to Keep Your SUI Rate Low

Your SUI rate is not set in stone. Employers who actively manage their workforce and respond to claims appropriately can significantly reduce their unemployment insurance costs over time.

1. Maintain Stable Employment

The most effective way to keep your SUI rate low is to avoid layoffs and terminations whenever possible. High turnover directly increases the unemployment benefits charged to your account. Invest in retention: competitive wages, good working conditions, and clear expectations reduce voluntary and involuntary turnover alike.

2. Document Terminations Thoroughly

When termination is necessary, documentation is your best defense against having benefits charged to your account. Maintain records of:

• Written warnings with dates and employee signatures
• Performance improvement plans
• Incident reports for specific policy violations
• Attendance records
• The final termination letter stating the reason for discharge

3. Respond to Claim Notices Promptly

When a former employee files an unemployment claim, IDES sends you a notice requesting information. Always respond by the deadline. If you fail to respond, IDES will typically approve the claim by default and charge it to your account. Timely, thorough responses with supporting documentation give you the best chance of a favorable determination.

4. Hire Carefully

Poor hiring decisions lead to early terminations, which lead to unemployment claims. Take time to:

• Define the role clearly before posting the job
• Check references
• Use a structured interview process
• Set clear expectations during onboarding

A more deliberate hiring process reduces the chance that a new hire will not work out and file a claim shortly after separation.

5. Appeal Questionable Claims

If you believe a claim should not be charged to your account — for example, if the employee quit voluntarily or was terminated for documented misconduct — file an appeal. IDES has a formal appeal process, and employers who participate with documentation frequently succeed in having charges reversed.

Frequently Asked Questions