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State unemployment taxes are paid by the employer and are not deducted from the employee’s wages in almost all states. These taxes are in addition to any federal unemployment taxes owed. Each state has a different rate and different wage limits from which the taxes are calculated. For information on state-specific unemployment taxes, local laws should be consulted.
State statutes generally provide for administrative review of determinations respecting claims for unemployment compensation benefits when appeals are filed by either the claimant or an aggrieved employer whose tax liability may be affected by an award of benefits. Judicial review of such administrative action, while generally available by mandamus or a petition for declaratory relief, is typically narrow in scope and courts will not ordinarily overrule administrative findings if supported by substantial evidence. For federal income tax purposes, unemployment compensation benefits are taxable as part of the recipient's gross income.