US Payroll Tax Guide for Employers — FICA, FUTA, State Taxes (2026)

Quick Answer

As a US employer, you must withhold and pay these payroll taxes:

| Tax | Employee Share | Employer Share | Wage Base (2026) | |---|---|---|---| | Social Security (OASDI) | 6.2% | 6.2% | $168,600 | | Medicare | 1.45% | 1.45% | No limit | | Additional Medicare | 0.9% (over $200K) | — | Over $200,000 | | FUTA | — | 6.0% (0.6% effective) | $7,000 | | Federal Income Tax | Per W-4 | — | Per tables |

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Understanding FICA Taxes

FICA (Federal Insurance Contributions Act) funds Social Security and Medicare:

Social Security Tax

• Rate: 6.2% employee + 6.2% employer = 12.4% total
• Wage base: $168,600 for 2026 (adjusted annually for inflation)
• After wage base: No more Social Security tax for that employee

Medicare Tax

• Rate: 1.45% employee + 1.45% employer = 2.9% total
• No wage base limit — applies to all earnings
• Additional Medicare: 0.9% on employee earnings over $200,000 (no employer match)

Federal Unemployment Tax (FUTA)

• Rate: 6.0% on first $7,000 of each employee's wages
• Credit: Up to 5.4% credit for state unemployment taxes paid
• Effective rate: Usually 0.6% (6.0% - 5.4% credit)
• Annual cost per employee: $42 maximum

Deposit Schedules

| Schedule | Frequency | Trigger | |---|---|---| | Monthly | By 15th of following month | Total taxes ≤ $50,000 in lookback period | | Semi-weekly | Wed/Fri after payday | Total taxes > $50,000 in lookback period | | Next-day | Next business day | $100,000+ accumulated on any day |

Key Filing Deadlines

| Form | What | When | |---|---|---| | Form 941 | Quarterly payroll tax return | April 30, July 31, Oct 31, Jan 31 | | Form 940 | Annual FUTA return | January 31 | | W-2 | Employee wage statements | January 31 (to employees and SSA) | | W-3 | Transmittal of W-2s | January 31 | | Form 1099-NEC | Contractor payments | January 31 |

Employer Payroll Checklist

1. ✅ Obtain EIN from IRS
2. ✅ Collect W-4 from each employee
3. ✅ Set up payroll system (ADP, Gusto, Paychex)
4. ✅ Calculate and withhold taxes each pay period
5. ✅ Deposit payroll taxes per your schedule
6. ✅ File Form 941 quarterly
7. ✅ Issue W-2s by January 31
8. ✅ File Form 940 annually

Frequently Asked Questions

What's the penalty for late payroll tax deposits?

Penalties range from 2% (1-5 days late) to 15% (more than 10 days after IRS notice). The trust fund recovery penalty can make responsible persons personally liable for unpaid payroll taxes.

Do I need to withhold taxes for 1099 contractors?

No — independent contractors pay their own taxes. You issue Form 1099-NEC if you pay them $600+ in a year. However, misclassifying employees as contractors can lead to severe IRS penalties.