Payroll Tax Calculator
Calculate the total employer-side payroll tax burden across Social Security, Medicare, FUTA, and state unemployment. Use it when budgeting total compensation costs or reconciling quarterly payroll tax deposits.
About this calculator
Employers owe several mandatory taxes on top of the wages they pay employees. The combined burden is: Total Payroll Tax = totalPayroll × ((socialSecurityRate + medicareRate + futaRate + stateUnemploymentRate) / 100). Social Security (6.2%) and Medicare (1.45%) form FICA — the employer matches the same rates employees pay. FUTA (Federal Unemployment Tax Act) is 6% on the first $7,000 per employee but is reduced to an effective 0.6% for most employers who pay state unemployment (SUTA/SUI) on time. State unemployment rates vary widely by state and experience rating — new employers often start at a standard rate of 2–3%. Summing all four rates gives the effective employer tax rate applied to gross payroll. Note that wage-base caps on Social Security ($168,600 in 2024) and FUTA mean the true blended rate falls as high earners cross their ceilings.
How to use
A small business has a total annual payroll of $400,000 and uses these rates: Social Security 6.2%, Medicare 1.45%, FUTA 0.6% (after state credit), state unemployment 2.7%. Step 1 — sum the rates: 6.2 + 1.45 + 0.6 + 2.7 = 10.95%. Step 2 — apply to payroll: $400,000 × (10.95 / 100) = $400,000 × 0.1095 = $43,800 total employer payroll taxes for the year. This means roughly $10.95 in tax is owed for every $100 of wages paid. That $43,800 needs to be budgeted alongside base wages when calculating true workforce costs.
Frequently asked questions
What payroll taxes does an employer pay on top of an employee's wages?
Employers are responsible for their share of FICA taxes — 6.2% for Social Security (up to the annual wage base) and 1.45% for Medicare (with no cap) — plus federal unemployment tax (FUTA) and state unemployment insurance (SUI or SUTA). These are entirely separate from and in addition to any amounts withheld from the employee's own paycheck. In total, most US employers pay between 9% and 12% of gross wages in mandatory payroll taxes, depending on the state unemployment rate and how many employees exceed the Social Security wage cap.
How is the FUTA tax rate calculated after the state unemployment credit?
The gross FUTA rate is 6.0% on the first $7,000 of each employee's wages. However, employers who pay their state unemployment taxes on time and in full receive a credit of up to 5.4%, reducing the effective federal rate to just 0.6%. This credit structure means that in practice, most businesses pay only $42 per employee per year in FUTA ($7,000 × 0.6%), making state unemployment contributions the more significant variable in the total unemployment tax burden.
Why does state unemployment tax rate vary between businesses in the same state?
State unemployment (SUI/SUTA) rates are assigned based on an employer's experience rating — essentially their claims history. Businesses with few former employees filing unemployment claims earn lower rates over time, while companies with high turnover or frequent layoffs are assigned higher rates as a reflection of greater risk to the state's unemployment fund. New employers typically start at a standard new-employer rate until they accumulate enough history. Managing turnover and contesting improper unemployment claims are both practical ways to keep your SUI rate from climbing.