Question 1

What payroll taxes do employers pay?

Accepted Answer

Employers pay four main payroll taxes: Social Security (6.2% on wages up to $176,100 in 2025), Medicare (1.45% on all wages with no cap), FUTA — Federal Unemployment Tax (6% on the first $7,000 per employee, reduced to 0.6% after the standard state credit), and SUTA — State Unemployment Tax (rate and wage base vary by state and employer experience rating). Employees also pay matching Social Security and Medicare from their wages.

Question 2

What is FUTA and how does it work?

Accepted Answer

FUTA (Federal Unemployment Tax Act) is a federal payroll tax paid only by employers, not employees. The gross rate is 6.0% on the first $7,000 of each employee wages per year. However, employers in states that comply with federal unemployment requirements receive a 5.4% credit, bringing the effective FUTA rate to 0.6%. A few states with outstanding federal UI loans may have a reduced credit, resulting in higher effective FUTA rates.

Question 3

What is SUTA and how are rates determined?

Accepted Answer

SUTA (State Unemployment Tax Act) is the state-level unemployment insurance tax paid by employers. Each state sets its own wage base (the amount of wages per employee subject to the tax) and rate schedule. New employers typically pay an average or standard rate set by the state. After a few years, your rate is adjusted based on your experience rating — employers with fewer unemployment claims pay lower rates, while those with more claims pay higher rates.

Question 4

How often do employers pay payroll taxes?

Accepted Answer

Federal payroll tax deposits (Social Security, Medicare, and federal income tax withholding) are generally due on a semi-weekly or monthly schedule, depending on the total tax liability. FUTA deposits are due quarterly if the liability exceeds $500. SUTA payment frequency varies by state but is typically quarterly. Employers file Form 941 quarterly and Form 940 annually to report these taxes.

Question 5

Are there additional employer costs beyond payroll taxes?

Accepted Answer

Yes. Beyond the four main payroll taxes, employers may also face state disability insurance (e.g., California SDI), paid family leave contributions (e.g., New York PFL), workers compensation insurance, local payroll taxes (e.g., New York City), and transit taxes. These vary significantly by state and locality. The calculator above focuses on the four universal employer payroll taxes.

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