1. Payroll Taxes: Employee & Employer Liabilities
Payroll taxes are shared liabilities calculated from employee wages. Employers are responsible for withholding taxes from employee paychecks and paying matching contributions. Our payroll tax calculator provides a breakdown of these withholdings and employer burdens.
2. Employee Withholdings: FICA and Income Taxes
Employers must withhold flat FICA taxes from employee paychecks, which consist of 6.2% for Social Security (up to the $168,600 wage limit) and 1.45% for Medicare. Progressive federal and state income taxes are also withheld based on the employee’s W-4 parameters.
3. Employer Matching Contributions
Employers must match employee FICA contributions by paying an additional 6.2% for Social Security and 1.45% for Medicare. These employer payroll contributions are tax-deductible as business expenses.
4. Federal and State Unemployment Taxes (FUTA & SUTA)
Employers must also pay Federal Unemployment Tax (FUTA) and State Unemployment Tax (SUTA). FUTA is a flat 0.6% tax on the first $7,000 of employee wages, while SUTA rates vary depending on the employer’s history of unemployment claims in that state.