Employer Payroll Tax / True Cost of an Employee Calculator

Employers pay the employer share of FICA — 6.2% Social Security on wages up to the SS wage base ($176,100 for 2025, $184,500 for 2026) plus 1.45% Medicare on ALL wages, uncapped — plus FUTA (federal unemployment, 0.6% net on the first $7,000 in most states) plus SUTA/SUI (state unemployment, rate and wage base set by each state). Optional employer costs on top of that: workers' compensation insurance and benefits (health insurance, 401(k) match, PTO accrual). None of this is withheld from the employee's paycheck — it's an additional employer cost.

No. The 0.9% Additional Medicare Tax (IRC §3101(b)(2), on wages above $200,000 single / $250,000 MFJ) is withheld ONLY from the employee's paycheck — there is no employer-side match for it. The employer's Medicare share stays at 1.45% on all wages regardless of how high the employee's pay goes. This differs from the base 1.45% Medicare rate, which both employer and employee pay.

FUTA (Federal Unemployment Tax Act, IRC §3301) is a federal payroll tax paid ENTIRELY by the employer — never withheld from wages. The gross rate is 6.0% on the first $7,000 of each employee's wages (IRC §3306(b)(1), unchanged since 1983). Employers who pay state unemployment tax on time get a credit of up to 5.4% (IRC §3302), bringing the effective rate down to 0.6% — just $42 per employee per year in a non-credit-reduction state. Filed annually on Form 940.

A credit reduction state hasn't repaid money it borrowed from the federal government to cover state unemployment benefit shortfalls for 2+ consecutive years. Employers with wages in that state owe ADDITIONAL FUTA tax — reported on Schedule A (Form 940) — on top of the standard 0.6% net rate. For 2025: California (+1.2%), U.S. Virgin Islands (+4.5%). The US Department of Labor publishes the final list each November for that calendar year, so 2026's list isn't published until November 2026.

SUTA (State Unemployment Tax Act, also called SUI — state unemployment insurance) is a SEPARATE state-level payroll tax, distinct from federal FUTA. Every state sets its own rate and taxable wage base independently — 2025 wage bases range from $7,000 (the federal FUTA floor — Arizona, Arkansas, California, Florida, Tennessee) up to $72,800+ (Washington). Your specific rate is assigned by your state UI agency based on your industry and claims history ("experience rating") — new employers typically get a flat "new employer rate" for their first few years. This calculator asks for your rate and wage base directly since there's no single 51-jurisdiction federal source.

Fully-loaded cost = base gross wage + all employer payroll taxes (FICA match, FUTA, SUTA) + optional add-ons (workers' comp, benefits). A common rule of thumb puts total employer cost at 1.25×–1.4× the base salary once benefits are included, though the payroll-tax-only portion (no benefits) is usually much smaller — often 7-10% of wages for a mid-income W-2 employee. This calculator computes your exact figure rather than relying on the rule of thumb.

Not technically — workers' comp is mandatory insurance (state-regulated, purchased from a private carrier or state fund), not a tax remitted to a government unemployment or revenue agency. But it IS a required employer cost tied to payroll, so it's included here as an optional add-on. Real premiums are calculated per $100 of payroll by industry "class code" (a roofer's rate is much higher than an office worker's) — this calculator applies a flat % you supply as an estimate.

Hiring a 1099 independent contractor means NO employer payroll tax obligation at all — no FICA match, no FUTA, no SUTA, no workers' comp (in most states) — because the contractor pays the full 15.3% self-employment tax themselves and isn't a covered "employee" for unemployment/workers' comp purposes. That's a real cost saving, but IRS worker-classification rules (behavioral/financial/relationship control tests) determine whether a worker legally qualifies as a contractor — misclassifying an employee as a 1099 to dodge payroll tax risks back taxes, penalties, and Form SS-8 reclassification. See the /w2-vs-1099-comparison/ calculator for the full comparison.

Yes, with modified thresholds — a household employer paying a nanny or caregiver $2,800+ cash wages in 2025 (Schedule H threshold, IRS-published annually) owes the same employer FICA match (6.2% SS + 1.45% Medicare) plus FUTA if wages exceed $1,000 in any calendar quarter, reported on Schedule H with the household employer's Form 1040 rather than a business Form 941/940. See the /nanny-tax-calculator/ for the household-specific version.