Employer payroll taxes add roughly 8–12% to the cost of every employee on top of their
base salary. For a $75,000 employee, that means $6,000–$9,000 in additional mandatory
taxes per year.
US employer payroll taxes (2024)
Tax
Rate
Wage base
Social Security (employer)
6.2%
First $160,200
Medicare (employer)
1.45%
Uncapped
FUTA (Federal Unemployment)
0.6%*
First $7,000
*After state unemployment tax credit. Actual FUTA rate is 6%, reduced by up to 5.4% credit.
State taxes not included
This calculator covers federal payroll taxes only. Most states have additional
State Unemployment Tax (SUTA) with rates ranging from 0.1% to 10%+ depending on the
employer's experience rating.
Total cost of employment
The fully-loaded cost of an employee includes:
- Base salary
- Employer payroll taxes (~8–10%)
- Health insurance contribution ($5,000–$15,000/year)
- 401(k) match (3–5% of salary)
- Equipment, software, office space
For budgeting purposes, assume 1.25–1.40× base salary as total employment cost.
Complete guide to US federal employer payroll taxes — Social Security, Medicare, FUTA — with 2024 rates, wage bases, and calculation examples.
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
Tax
Calculation
Employer cost
Social Security
$80,000 × 6.2%
$4,960
Medicare
$80,000 × 1.45%
$1,160
FUTA
$7,000 × 0.6%
$42
Total
$6,162
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.
SUTA vs FUTA: State vs Federal Unemployment Taxes Explained
How FUTA and SUTA work together for employer unemployment taxes — rates, wage bases, credit mechanics, and what triggers an experience rate adjustment.
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.