Payroll Tax Rates

Payroll Tax Rates refer to the percentages of an employee’s wages that must be withheld and paid by both the employee and employer to fund government programs such as Social Security, Medicare, unemployment insurance, and other state-specific initiatives. These rates vary by jurisdiction and may change annually based on legislative updates or economic conditions.

Employers are responsible for staying current with applicable rates and ensuring accurate calculation and timely remittance of these taxes. In addition to federal and provincial rates, some regions may impose local payroll taxes or special levies.

Key Facts

• Federal Taxes: Employers and employees each pay 6.2% for Social Security (up to the wage base limit) and 1.45% for Medicare.‍
• Additional Medicare: Employees earning over $200,000 pay an extra 0.9% in Medicare tax.‍
• FUTA and SUTA: Employers also pay Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) taxes, with rates varying by state.‍
• State and Local: Some states and municipalities have additional payroll taxes, including disability insurance and local taxes.‍
• Rate Changes: Payroll tax rates can change annually based on legislative updates and cost-of-living adjustments.

1. Who sets payroll tax rates?

The IRS sets federal payroll tax rates, while states and some local governments set their own rates for unemployment and other programs.

2. What is the Social Security wage base limit?

It’s the maximum amount of earnings subject to Social Security tax. For 2025, it is $168,600 (subject to annual updates).

3. Are employers required to match employee payroll taxes?

Yes, employers must match Social Security and Medicare taxes (FICA).

4. Do self-employed individuals pay payroll taxes?

Yes, through self-employment tax, which combines both the employee and employer portions of FICA.

5. How do I find my state’s payroll tax rate?

Visit your state’s Department of Revenue or Department of Labor website for up-to-date tax rate information.