Payroll Tax Calculator

As an employer in the US, you pay payroll taxes on top of every employee's gross salary. Here is what you owe and how it is calculated.

Federal employer payroll taxes (2024)

Social Security (OASDI) — 6.2%

Rate: 6.2% on wages up to $168,600 (2024 wage base — confirm current year) The employee also pays 6.2%; total FICA = 12.4% split equally.

Medicare — 1.45%

Rate: 1.45% on all wages, no cap. The employee also pays 1.45% (+ 0.9% additional Medicare on wages above $200k for the employee only).

FUTA (Federal Unemployment Tax) — 0.6%

Rate: 6.0% on first $7,000 of each employee's wages. Most employers receive a 5.4% credit for paying state unemployment (SUTA), reducing the effective rate to 0.6%.

Example calculation: $80,000 salary

Total employment cost = $80,000 + $6,162 = $86,162

SUTA rates vary by state (0.1%–10%+) and prior layoff history. Always model your specific state rate separately.

Use the payroll tax calculator to compute employer costs for any salary.

Most employers pay two unemployment tax systems simultaneously — FUTA (federal) and SUTA (state). Here is how they interact.

FUTA: Federal Unemployment Tax

Rate: 6.0% on first $7,000 of each employee's wages. Net effective rate: 0.6% for most employers. Why lower: employers who pay SUTA on time and in full receive a 5.4% credit, reducing the effective rate to 0.6%.

FUTA funds the federal unemployment insurance system and state program loans.

SUTA: State Unemployment Tax

Rates vary by state and employer experience rating: - New employers: typically 1–4% (varies by state) - Established employers: 0.1–10%+ (based on claims history) - Wage bases: $7,000 (minimum federal) to $62,500+ (Washington State)

The experience rating system

Your SUTA rate is recalculated each year based on your layoff history: - Low layoffs → rate decreases ("negative experience") - High layoffs → rate increases ("positive experience" in the tax sense)

Employers who do extensive layoffs may lose the FUTA credit (credit reduction states).

Impact on hiring decisions

Before laying off, consider: even one unemployment claim can increase your SUTA rate for 3+ years. For a $100k salary with 2% SUTA, a 1% rate increase = ~$500/year per employee on the wage base.

Use the payroll tax calculator to compute your federal employer payroll taxes. Add state SUTA separately based on your state rate.