Employer Payroll Taxes

What are Employer Payroll Taxes? 

The law mandates payroll taxes to be withheld from the paycheck of employees each pay period. Employer payroll taxes refer to the part of payroll taxes that companies are responsible for. Employers transmit these to different tax agencies. 

Employer payroll taxes include the following: 

• Social Security Tax: this tax is the responsibility of both the employer and employee. Employers must contribute 6.2% of each employee’s wages. The employee pays 6.2% into Social Security as well. 
• Medicare Tax: the employer and employee each pay 1.45% of wages.
• Federal Unemployment Tax (FUTA)
  • Only the employer is required to pay this. 
  • This tax is used to fund a federal program that provides unemployment benefits to eligible workers who lose their jobs. 
  • FUTA tax rate is 6% which applies to the first $7,000 the employer paid to each employee as wages during the year. 
• State Unemployment Tax (SUTA)
  • In most U.S. states, only the employer is required to pay SUTA. However, employees in Alaska, New Jersey, and Pennsylvania must pay this tax as well.
  • Similar to the federal unemployment tax, this tax funds a program that provides unemployment benefits to eligible displaced workers. The only difference is that SUTA is a state program.