Last reviewed: October 2026
Quick Answer
To register for Alabama SUI, file Form SR-2 (Application to Determine Liability) with the Alabama Department of Workforce, online through its eGov system or on paper. Most businesses must register once they pay $1,500 in wages in a calendar quarter or have a worker in 20 different weeks of the year. New employers then pay 2.70% on the first $8,000 of each employee's wages and file a report every quarter.
In This Guide
State unemployment insurance (SUI) in Alabama is run by the Alabama Department of Workforce, the agency that used to be called the Alabama Department of Labor. Your SUI account is separate from your state income tax withholding account with the Alabama Department of Revenue. You need both, and registering for one does not open the other. Our Alabama new employer registration guide covers the full list of accounts.
Who Has to Register
The Department of Workforce sets out liability tests in its employer FAQ. A regular (non-farm) business becomes liable when either of these is true in the current or preceding calendar year:
- You paid wages of $1,500 or more in any calendar quarter.
- You had one or more workers on some day in 20 or more different weeks. The weeks do not have to be consecutive.
Other employers have their own tests. A household that pays domestic workers $1,000 or more in cash wages in any calendar quarter is liable. A farm is liable once it has 10 or more agricultural workers in 20 or more different weeks, or pays $20,000 in agricultural wages in a calendar quarter.
The $1,500 test is easy to hit. One part-time employee earning $12 an hour for 20 hours a week earns $240 a week, which passes $1,500 in about seven weeks. The FAQ says employers should apply as soon as liability is established, so do not wait for the quarter to end.
Who counts as an employee? The agency uses a right-of-control test. If your business has the right to control how the work is done, the worker is an employee, whether or not you actually exercise that control.
How to Register: Form SR-2 and eGov
The registration form is Form SR-2, Application to Determine Liability. You can file it two ways.
Online. Create an account in the Department of Workforce eGov system. Once you are signed in, eGov lets you register for a state unemployment insurance account number, change your UC mailing address, and view your account summary. You will use the same eGov login later to file quarterly reports, so set it up with an email address the business will keep.
On paper. Download the Form SR-2 PDF and send it to the Status Unit at 649 Monroe Street, Room 4201, Montgomery, AL 36131. The unit's phone number is (334) 954-4730 and its fax is (334) 954-4731.
From the Payroll Desk
Start the SR-2 when you make your first hire, not when the first quarterly report is due. You need the account number to file that report, and a late report carries a penalty even if the tax itself is small.
Your First Rate and What It Costs
According to the Department of Workforce, employers newly liable under Alabama's unemployment law pay 2.70% on the first $8,000 of wages for each employee in the calendar year. Wages above $8,000 for that employee are not taxed for the rest of the year.
The math is simple. 2.70% of $8,000 is $216, so the most a new employer pays is $216 per employee per year. An employee who earns $5,000 in the year costs $135. After you have been liable long enough, the agency assigns an experience rate based on your benefit charges and taxable payroll. Our Alabama SUI rates guide explains how experience rating works.
This is an employer tax. The agency's FAQ describes it only as a tax on wages the employer pays, so nothing comes out of the employee's check.
Quarterly Reports After You Register
Once you have an account number, you file a Contribution and Wage Report every quarter. The FAQ says reports are due the last day of the month after the quarter ends:
- First quarter (January to March): April 30
- Second quarter (April to June): July 31
- Third quarter (July to September): October 31
- Fourth quarter (October to December): January 31
Reports must be filed online through eGov. The agency does not accept computer-generated paper reports. Wage corrections go in on Form UC-10-C, also through eGov.
Late filing is costly for a small account. The penalty for a late report is $25 or 10% of the tax owed, whichever is greater. Unpaid tax also accrues interest of 1% per month until it is paid.
Buying an Existing Business
If you buy the trade, business or substantially all the assets of an Alabama employer that was already liable, that purchase makes you subject to Alabama unemployment tax. The agency also assigns the seller's experience (benefit charges and taxable payroll) to you. That can help or hurt. A seller with heavy benefit charges passes those charges into your rate. Ask for the seller's latest rate notice before closing.
Once your SUI account is open, the rest of the setup is in our step-by-step guide to doing payroll in Alabama.
Frequently Asked Questions
When does an Alabama business have to register for SUI?
Most businesses become liable once they pay $1,500 or more in wages in any calendar quarter, or have at least one worker on some day in 20 or more different weeks, in the current or preceding calendar year. The Alabama Department of Workforce asks employers to apply as soon as liability is established.
What form do I use to register for Alabama unemployment tax?
Form SR-2, the Application to Determine Liability. You can file it online through the Department of Workforce eGov system or send the paper form to the Status Unit in Montgomery.
What SUI rate does a new Alabama employer pay?
A newly liable employer pays 2.70% on the first $8,000 of wages for each employee in the calendar year. That works out to at most $216 per employee per year. Later rates come from experience rating.
When are Alabama quarterly unemployment reports due?
Contribution and Wage Reports are due the last day of the month after each quarter ends: January 31, April 30, July 31 and October 31. They must be filed online through eGov.
Does Alabama SUI come out of employee paychecks?
No. The Department of Workforce describes Alabama unemployment tax as an employer tax on the first $8,000 the employer pays each worker. Do not withhold it from wages.
Handling all of this by hand is possible for a one- or two-person payroll, but the deposit and filing calendar gets unforgiving fast once you add employees or run into an SUI rate change. Payroll software built for small business, such as Gusto, calculates federal and Alabama withholding automatically, files your quarterly and annual returns, and handles W-2 delivery at year-end so you are not tracking five deadlines in a spreadsheet.
Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of October 2026 and may not reflect recent changes in federal or Alabama state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or payroll professional familiar with Alabama law before making payroll or compliance decisions for your business.