Payroll Tax Calculator
Calculate the total employer-side payroll tax liability including Social Security, federal unemployment (FUTA), and state unemployment (SUTA) contributions on gross wages. Use it for small business payroll planning or verifying quarterly tax deposits.
About this calculator
Employers are responsible for several payroll taxes on top of employees' gross wages. This calculator uses the formula: Total Payroll Tax = min(grossWages, socialSecurityCap) × 0.062 + min(grossWages, unemploymentWageBase) × 0.009 + min(grossWages, unemploymentWageBase) × (stateUnemploymentRate / 100). The first term is the employer's Social Security contribution of 6.2%, capped at the annual Social Security wage base ($168,600 in 2024). The second term is the net FUTA rate of 0.9% (the gross 6% rate minus a 5.4% credit for timely state unemployment payments), applied up to the $7,000 federal wage base. The third term is the SUTA contribution, which varies by state and employer experience rating, applied up to the state's own wage base. Employers also owe a matching 1.45% Medicare tax, though that is not shown in this specific formula.
How to use
Suppose an employee has gross wages of $10,000 YTD, the Social Security wage base is $168,600, the unemployment wage base is $7,000, and the state unemployment rate is 2.7%. Step 1: Social Security tax = min($10,000, $168,600) × 0.062 = $10,000 × 0.062 = $620. Step 2: FUTA tax = min($10,000, $7,000) × 0.009 = $7,000 × 0.009 = $63. Step 3: SUTA tax = min($10,000, $7,000) × 0.027 = $7,000 × 0.027 = $189. Step 4: Total employer payroll tax = $620 + $63 + $189 = $872.
Frequently asked questions
What is the difference between FUTA and SUTA payroll taxes?
FUTA (Federal Unemployment Tax Act) is a federal employer tax of 6% on the first $7,000 of each employee's wages, but most employers receive a 5.4% credit for paying state unemployment taxes on time, resulting in a net rate of 0.6% (this calculator uses 0.9%, which may reflect a reduced credit scenario). SUTA (State Unemployment Tax Act) is the state-level counterpart, with rates and wage bases that vary by state and are influenced by the employer's unemployment claims history — a concept called experience rating. Both taxes fund unemployment insurance benefits paid to eligible workers who lose their jobs.
Why does the Social Security tax have a wage base cap in payroll tax calculations?
The Social Security wage base cap means that only earnings up to a set annual threshold — $168,600 in 2024 — are subject to the 6.2% employer (and employee) Social Security tax. Earnings above that cap are exempt from Social Security tax for the remainder of the year. This cap is adjusted annually by the Social Security Administration based on changes in average wages. Unlike Social Security, Medicare has no wage base cap, and high earners (above $200,000) are subject to an additional 0.9% Additional Medicare Tax on the employee side.
How can employers reduce their state unemployment (SUTA) tax rate?
SUTA rates are largely determined by an employer's experience rating — essentially a track record of unemployment claims filed by former employees. Employers with fewer layoffs and unemployment claims accumulate a lower rate over time, while those with frequent turnover face higher rates. Strategies to lower your SUTA rate include contesting unwarranted unemployment claims, reducing involuntary turnover, and maintaining consistent payroll. Some states also allow voluntary contributions to the state unemployment fund to improve your rating. New businesses typically receive an assigned new-employer rate until sufficient claims history is established.