The short answer
- Employer Social Security: 6.2% of wages up to $184,500. Employer Medicare: 1.45% of all wages.
- FUTA: 0.6% of the first $7,000 (usually $42 per employee a year), more in California.
- SUTA: your state’s rate on its own wage base, $7,000 to $78,200 in 2026.
- On a $50,000 salary in Texas, employer payroll taxes are about $4,110 a year: 8.2% on top of wages.
What employer payroll taxes are
Employers deal with two kinds of payroll tax:
- Federal income tax
- Form W-4
- Social Security
- 6.2%
- Medicare
- 1.45% (+0.9%)
- State and local income tax
- Varies
- Social Security
- 6.2%
- Medicare
- 1.45%
- FUTA
- 0.6% of $7,000
- SUTA
- State rate and base
Only the second column is a cost to the business. The first is the employee’s money that you hold and pass on. A few states also charge employers for disability insurance, paid family leave or workforce training.
Social Security and Medicare
Under the Federal Insurance Contributions Act (FICA), the employer matches the employee’s Social Security and Medicare. Social Security is 6.2% on wages up to $184,500 in 2026, so the most an employer pays per worker is $11,439. Medicare is 1.45% on every dollar, with no cap. The extra 0.9% Medicare tax on wages over $200,000 is paid by the employee only.
FUTA: federal unemployment tax
The Federal Unemployment Tax Act tax pays for the federal side of unemployment insurance. The rate is 6.0% on the first $7,000 of each employee’s wages a year. If you pay your state unemployment tax in full and on time, you get a credit of up to 5.4%, leaving 0.6%.
- Gross FUTA: 6.0% × $7,000$420
- Credit for state tax paid: 5.4% × $7,000−$378
Paying state tax late, or not at all, shrinks the credit, and FUTA can rise as high as $420 per employee.
FUTA credit reduction states
When a state borrows from the federal government to pay unemployment benefits and does not repay the loan in time, employers there lose part of the 5.4% credit. The reduction starts at 0.3% and grows each year the loan is unpaid.
| State | 2025 (final) | 2026 (possible) | FUTA per employee, 2026 |
|---|---|---|---|
| California | 1.2% | 1.5% | $147 |
| U.S. Virgin Islands | 4.5% | To be set | – |
| All other states | 0% | 0% | $42 |
The Department of Labor confirms the 2026 list after November 10, 2026. The extra tax is paid with Form 940 for 2026, due February 1, 2027 (January 31 falls on a Sunday).
SUTA: state unemployment tax
Each state runs its own unemployment insurance fund, paid for by employers. The state sets a taxable wage base (at least $7,000, the FUTA base) and a rate for each employer. New employers usually get a set rate for their first two or three years. After that, the rate follows your “experience”: how many former employees claimed benefits. Employers with few layoffs pay less.
Alaska, New Jersey and Pennsylvania also take a small unemployment contribution from employees’ pay. That is withheld, not an employer cost.
2026 SUTA wage bases and new employer rates
From the Department of Labor’s summary of state laws in effect on January 1, 2026:
| State | Taxable wage base | New employer rate | SUTA on $50,000 |
|---|---|---|---|
| California | $7,000 | 3.4% | $238 |
| Florida | $7,000 | 2.7% | $189 |
| Texas | $9,000 | 2.7% | $243 |
| Pennsylvania | $10,000 | 3.822% | $382 |
| Illinois | $14,250 | 2.8% | $399 |
| New York | $17,600 | 4.025% | $708 |
| New Jersey | $44,800 | 2.8% | $1,254 |
| Washington | $78,200 | By industry (2.7% assumed) | $1,350 |
Washington, Louisiana, Minnesota, Montana, New Mexico, Utah and Wyoming set new employer rates from the industry average; the calculator assumes 2.7% there. Your state sends a rate notice each year, and you can enter it under More options. Rates exclude surcharges some states add.
A $50,000 employee, line by line
- Wages$50,000
- Social Security: 6.2%$3,100
- Medicare: 1.45%$725
- FUTA: 0.6% × $7,000$42
- SUTA: 2.7% × $9,000$243
Employer taxes are $4,110, or 8.2% of wages. Per paid hour (2,080 a year), the employee costs $26.01 against a wage of $24.04.
How much the state changes it
Employer payroll taxes on a $50,000 salary, at each state’s 2026 new employer rate:
States with high wage bases, such as Washington and New Jersey, tax far more of each salary. California’s low base is offset by the FUTA credit reduction.
Benefits and insurance
- Health insurance. KFF’s 2025 survey found the average single plan cost $9,325 a year, with workers paying $1,440 and employers about $7,885. Family plans averaged $26,993.
- Retirement match. A match of 3% to 6% of pay is common. A 4% match on $50,000 is $2,000.
- Workers’ compensation. Required in almost every state. Insurers price it by job class, from well under 1% of pay for office staff to much more for roofers.
- Paid time off. Vacation, holidays and sick days do not add to wages, but they mean fewer hours of work for the same pay.
The full cost of an employee
- Wages$50,000
- Employer payroll taxes$4,110
- Health insurance (employer share)$7,885
- 401(k) match: 4%$2,000
- Workers' compensation: 1%$500
That is 29% on top of salary. A common rule of thumb is that an employee costs 1.25 to 1.4 times their salary; this example sits inside it.
Cost per hour worked
The cost per paid hour divides the total by 2,080 hours. But with 20 days of vacation, holidays and sick leave, the employee works 1,920 hours. In the example above, that turns $31.01 per paid hour into $33.59 per hour worked. Use the hours-worked figure when you price your services or compare an employee with a contractor.
High earners and the wage base
Unemployment taxes stop early in the year for most workers: FUTA after $7,000 and SUTA after the state base. Social Security stops at $184,500. On a $200,000 salary in Texas, employer taxes are $14,624, only 7.3% of wages, because Social Security stops at $11,439 while Medicare carries on at 1.45%.
What is not taxed as wages
Some pay and benefits are free of Social Security, Medicare and unemployment tax:
- Employer-paid health, dental and vision premiums.
- Employer 401(k) matching and profit-sharing contributions.
- Employee premiums and HSA or FSA amounts paid through a section 125 cafeteria plan.
- Accountable-plan expense reimbursements, such as mileage at the IRS rate.
An employee’s own 401(k) deferrals are still subject to Social Security, Medicare and FUTA, even though they escape income tax.
Deposits and forms
- Form 941 (quarterly): Social Security, Medicare and withheld income tax. Small employers with less than $1,000 a year of these taxes may file Form 944 once a year instead.
- Deposits: monthly if your lookback-period taxes were $50,000 or less, otherwise semiweekly. All deposits go through EFTPS or another electronic method.
- Form 940 (yearly): FUTA. Deposit each quarter once the amount owed passes $500.
- State returns: SUTA is usually reported and paid each quarter to your state workforce agency.
- Forms W-2 and W-3: to employees and the Social Security Administration by January 31.
The 2026 payroll tax calendar
- April 30, 2026Form 941 for January to March
- July 31, 2026Form 941 for April to June
- November 2, 2026Form 941 for July to September
October 31 falls on a Saturday.
- February 1, 2027Form 941 for October to December, Form 940, Forms W-2
January 31, 2027 falls on a Sunday.
Who has to pay FUTA
You pay FUTA if, this year or last, you paid $1,500 or more of wages in any calendar quarter, or had at least one employee for some part of a day in 20 or more different weeks. Household employers (of nannies or housekeepers, for example) pay it once they pay $1,000 of cash wages in a quarter. Farm employers have their own thresholds. Charities under section 501(c)(3) are exempt from FUTA, though most still pay state unemployment tax or reimburse the state for benefits.
Employees or contractors
You pay none of these taxes for an independent contractor paid on Form 1099-NEC; the contractor pays self-employment tax of 15.3% on their own profit instead. But the label in a contract does not decide it. The IRS looks at behavioral control, financial control and the relationship, and states often use stricter tests. Misclassifying an employee can bring back payroll taxes, interest and penalties. The 1099 vs W-2 calculator compares the two from the worker’s side, and the self-employment tax calculator shows a contractor’s tax.