SC Unemployment Tax: Rates, Wage Base, and Filing Deadlines

South Carolina employers fund the state’s unemployment insurance system through a payroll tax on the first $14,000 each employee earns per year, paid entirely by the employer with nothing withheld from wages. The South Carolina unemployment tax is collected by the Department of Employment and Workforce (DEW), and your rate depends on how long you’ve been in business and how many former employees have drawn benefits against your account. For 2026, rates run from 0.060% to 5.460%, and no solvency surcharge applies.¹

Which Employers Have to Pay

Most businesses become liable once they hit either of two thresholds under Title 41 of the South Carolina Code: paying $1,500 or more in total wages in any calendar quarter, or employing at least one person for some portion of a day in each of 20 different calendar weeks within a year. Those 20 weeks don’t have to be consecutive.² The tests look at both the current and preceding calendar year, so crossing a threshold last year keeps you liable this year even if payroll has since dropped.

Three categories of employer follow different rules:

Agricultural employers become liable after paying $20,000 or more in cash wages in any calendar quarter, or employing 10 or more workers for some portion of a day in each of 20 different weeks within a year.³
Domestic (household) employers become liable once they pay $1,000 or more in cash wages to household employees during any calendar quarter.³
Religious, charitable, and educational nonprofits become liable if they employ four or more individuals in each of 20 different weeks within a year.³

The $14,000 Taxable Wage Base

The tax applies only to the first $14,000 of each employee’s calendar-year wages.¹ Once a worker’s year-to-date wages pass that mark, no further state unemployment tax is owed on that person for the rest of the year. If you employ higher-paid workers, most of your annual liability falls in the first and second quarters as those wage bases fill up.

How Your Rate Is Set

The New Employer Rate

New employers pay an entry-level rate until they build enough claims history for an experience-based calculation. For 2026, that rate is 1.060%. The state technically assigns new employers the higher of rate class 12 or 1%, so the exact figure can shift year to year. The new employer rate stays in place until the business has at least 12 months of liability, at which point DEW calculates a rate based on the employer’s own experience.¹

Experience Rating and the 20 Rate Classes

Once eligible, your business is placed into one of 20 rate classes. For 2026, the classes range from 0.060% at the bottom to 5.460% at the top.¹ On a $14,000 wage base, that works out to roughly $8 per employee at class 1 and about $764 per employee at class 20.

DEW assigns your class using a benefit ratio: the total unemployment benefits charged to your account over the 12 preceding calendar quarters, divided by your taxable payroll over the same period.⁴ A lower benefit ratio earns a lower class. DEW ranks all employers by ratio and splits them into 20 classes, each holding roughly 5% of the state’s total taxable wages. Each year the department mails a Rate Determination Notice with the class and percentage for the coming year, and that rate applies for the full calendar year.¹ For 2026, rates across the board have either decreased or stayed the same compared to 2025.

Protesting Benefit Charges

Because your rate is driven by charges, reviewing the quarterly charge statement DEW sends is worth the time. You have 30 days from receiving the statement to protest any charge you believe is wrong, for instance where a former employee was fired for documented misconduct but benefits were still charged to your account.¹ Protests go through the Employer Self-Service portal. Miss the window and the charges stick, feeding into your rate.

Buying a Business: Successor Rates

If you acquire 95% or more of another business, you inherit that owner’s experience record and their tax rate for the rest of the calendar year. If you weren’t already an employer, you take on the predecessor’s rate directly. If you already had your own rate, that rate continues through year-end. When multiple predecessors are involved, the successor is assigned the highest rate among them.⁴ After the initial year, the employment records merge and DEW computes a new rate on the blended experience. Buying a business with a heavy claims history can meaningfully raise your tax cost, which is worth pricing before you close.

Registering with DEW

To open an account, you’ll need your Federal Employer Identification Number, the legal business name as registered with the South Carolina Secretary of State, physical addresses for every South Carolina location, and Social Security Numbers for all corporate officers or owners. The primary registration form is the UCE-101 (Employer Status Report), which asks for your first date of employment and the nature of your business. Address changes and structural updates go on form UCE-120. Both are on the DEW website.⁵ Employers with multiple South Carolina locations may also need to file a Multiple Worksite Report with the Bureau of Labor Statistics, generally when secondary locations collectively employ 10 or more workers.⁶

Quarterly Filing Deadlines

Wage reports and tax payments are due the end of the month after each quarter closes:⁷

Q1 (January–March): April 30
Q2 (April–June): July 31
Q3 (July–September): October 31
Q4 (October–December): January 31

Filing and payment run through DEW’s Employer Self-Service portal, which calculates the amount due from your rate class and the wages you enter. The portal accepts ACH debit, credit card, and check payments, and electronic filing returns an immediate confirmation.

Penalties for Late Filing, Late Payment, and Fraud

Penalties stack. An employer who files late and underpays can owe interest plus multiple penalty layers on the same quarter.

Late filing after demand: if you miss a filing deadline and don’t respond within 15 days of DEW’s demand for the report, the penalty is 10% of the contributions due, with a $25 minimum and $1,000 maximum.⁴
Interest on unpaid contributions: 1% per month, or fraction of a month, from the due date.⁴
Late payment after assessment: an additional 10% penalty, capped at $1,000, if contributions remain unpaid 10 days after DEW issues an assessment or debit memorandum. This is on top of interest.⁴
Negligent understatement: 10% of the deficiency plus interest when DEW finds you understated contributions through negligence without intent to defraud.⁴
Fraudulent understatement: 100% of the deficiency, meaning double the tax owed, plus interest, if the understatement was false or fraudulent with intent to evade.⁴

South Carolina also polices “SUTA dumping,” where an employer manipulates business structures to obtain a lower rate, such as spinning off a shell company to shed a bad experience record. Knowingly attempting this brings a penalty of the greater of $1,000 or 10% of the tax due per report filed in violation, and corporate officers and directors are personally liable for those penalties.⁴

How the State Tax Interacts with FUTA

Federal unemployment tax under 26 U.S.C. § 3301 is separate and additional. FUTA is 6.0% on the first $7,000 of each employee’s annual wages, but employers who pay state unemployment taxes on time receive a credit of up to 5.4%, cutting the effective FUTA rate to 0.6%.⁸ States that borrowed from the federal trust fund and didn’t repay on time can trigger a credit reduction for their employers. For 2026, only California and the U.S. Virgin Islands are on the potential credit reduction list; South Carolina is not affected. SC employers who pay state taxes on schedule owe just 0.6% in FUTA, or about $42 per employee on the $7,000 federal base.

Two Classification Traps

Your liability turns on who counts as an employee. Treating a worker as an independent contractor when they’re really an employee doesn’t erase the tax; it defers it until an audit, at which point you owe back taxes, penalties, and interest at once. The IRS looks at behavioral control, financial control, and the nature of the relationship, weighing the full picture rather than any single factor.⁹ The Department of Labor uses an “economic reality” test focused on whether the worker is genuinely in business for themselves.¹⁰ Unintentional misclassification exposes you to back FICA plus a penalty of 1.5% of wages paid and 40% of the withheld FICA taxes, and both figures double if no 1099 was filed. Willful misclassification runs to 100% of both the employer and employee FICA shares plus 20% of all wages paid to the worker.

The second trap is multi-state work. When an employee works in more than one state, only one state gets the unemployment tax. The Department of Labor’s localization-of-work tests are applied in order: localization of the work, base of operations, place of direction and control, and finally the employee’s state of residence. For South Carolina employers with remote or traveling staff, walking through the tests in order avoids paying into the wrong state, or paying into two states and having to chase a refund from one.

1
SC Department of Employment and Workforce. Tax Rate Information
2
South Carolina Legislature. South Carolina Code 41-27-210 – Employer
3
South Carolina Legislature. South Carolina Code of Laws Title 41 Chapter 27
4
South Carolina Legislature. South Carolina Code of Laws Title 41 Chapter 31
5
SC Department of Employment and Workforce. Forms
6
U.S. Bureau of Labor Statistics. Multiple Worksite Report
7
SC Department of Employment and Workforce. Paying Your Tax
8
Internal Revenue Service. Topic No. 759, Form 940, Employers Annual Federal Unemployment Tax
9
Internal Revenue Service. Independent Contractor (Self-Employed) or Employee
10
U.S. Department of Labor. Notice of Proposed Rule: Employee or Independent Contractor Status Under the Fair Labor Standards Act