Payroll taxes include Social Security (6.2%), Medicare (1.45%), and federal unemployment tax (FUTA). Both employees and employers pay Social Security and Medicare taxes, while employers pay FUTA. Additional Medicare Tax (0.9%) applies to high earners and is paid only by employees.

For 2025: Social Security is 6.2% each for employee and employer (12.4% total) on wages up to $168,600. Medicare is 1.45% each (2.9% total) with no wage limit. Additional Medicare Tax is 0.9% on income over $200,000 (single) or $250,000 (married filing jointly).

For 2025, the Social Security wage base is $168,600. This means Social Security tax (6.2%) is only paid on the first $168,600 of annual wages. Once you earn more than this amount, you stop paying Social Security tax for the rest of the year.

Payroll taxes reduce your take-home pay by 7.65% (6.2% Social Security + 1.45% Medicare) for most employees. High earners pay an additional 0.9% Medicare tax. These taxes are automatically deducted from your paycheck and cannot be avoided through deductions or exemptions.

FUTA (Federal Unemployment Tax Act) is paid only by employers, not employees. The rate is 6.0% on the first $7,000 of each employee's wages, but employers can receive a credit of up to 5.4% for state unemployment taxes, making the effective rate 0.6% in most states.

Payroll taxes fund Social Security and Medicare and have flat rates with wage caps. Income taxes fund general government operations, have progressive rates, and can be reduced through deductions and credits. Payroll taxes cannot be reduced through tax planning strategies.

Yes, self-employed individuals pay self-employment tax, which covers both the employee and employer portions of Social Security and Medicare taxes (15.3% total). They can deduct half of this tax as a business expense, and the same wage base limits apply.

If you worked for multiple employers and paid Social Security tax on wages exceeding the annual limit ($168,600 in 2025), you can claim a refund of the excess when filing your tax return. Medicare tax has no wage limit, so excess Medicare tax is generally not refundable.

Employers must pay Social Security (6.2%), Medicare (1.45%), Federal Unemployment Tax (0.6%), and State Unemployment Tax (varies by state). They also match employee FICA contributions and may pay workers' compensation insurance.

FICA taxes are 7.65% of gross wages: 6.2% for Social Security (up to $176,100 in 2025) and 1.45% for Medicare (no limit). High earners pay an additional 0.9% Medicare tax on income over $200,000.

The Social Security wage base for 2025 is $176,100. This means Social Security tax (6.2% for both employee and employer) is only paid on the first $176,100 of annual wages. Medicare tax has no wage base limit.

Pre-tax deductions (401k, health insurance, etc.) reduce federal and state income tax but generally don't reduce FICA taxes. However, some benefits like health insurance premiums may be exempt from FICA if they meet specific requirements.

FUTA is a federal tax paid by employers at 6.0% on the first $7,000 of each employee's wages. However, employers can claim a credit of up to 5.4% for state unemployment taxes paid, reducing the effective FUTA rate to 0.6%.

Deposit frequency depends on your tax liability. Monthly depositors (under $50,000 annually) deposit by the 15th of the following month. Semi-weekly depositors ($50,000+) deposit within 3 business days. Large employers may need to deposit the next business day.

Late payroll tax payments incur penalties ranging from 2% to 15% depending on how late they are. The IRS can also impose trust fund recovery penalties on responsible parties personally, making them liable for unpaid employment taxes.

Texas has no state income tax, so there's no state income tax withholding. However, employers must pay Texas State Unemployment Tax (SUTA) and may need to pay workers' compensation insurance depending on their industry and employee count.

Employers are responsible for withholding federal income tax, Social Security tax (6.2%), and Medicare tax (1.45%) from employee wages. Employers also pay matching Social Security and Medicare taxes, plus federal unemployment tax (FUTA) at 0.6% on the first $7,000 of wages, and state unemployment tax (SUTA) at varying rates.

Deposit frequency depends on your total tax liability. Monthly depositors (less than $50,000 in the lookback period) deposit by the 15th of the following month. Semi-weekly depositors deposit on Wednesday for Saturday-Tuesday paydays and Friday for Wednesday-Friday paydays. Large employers ($100,000+ in taxes) must deposit the next business day.

FUTA (Federal Unemployment Tax Act) is a federal tax paid by employers at 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% with state unemployment tax credits. SUTA (State Unemployment Tax Act) rates vary by state and employer experience rating, typically ranging from 0.5% to 10% on varying wage bases.

Pre-tax deductions like 401(k) contributions, health insurance premiums, and dependent care assistance reduce federal and state income tax withholding but are generally still subject to Social Security and Medicare taxes. This reduces the employee's taxable income while maintaining FICA tax obligations.

For 2025, Social Security tax applies to wages up to $176,100 (6.2% employee + 6.2% employer). Medicare tax has no wage limit (1.45% each for employee and employer). Additional Medicare tax of 0.9% applies to employee wages over $200,000 (no employer match).

Supplemental wages can be taxed using the flat rate method (22% for federal income tax) or the aggregate method (combined with regular wages). FICA taxes apply normally. The flat rate method is simpler for separate bonus payments, while the aggregate method may be more accurate for the employee's actual tax liability.

Employers must keep payroll records for at least 4 years, including employee W-4 forms, payroll registers, time records, tax deposit confirmations, and all filed tax returns. Records should include employee information, wages paid, hours worked, deductions taken, and taxes withheld.

Incorrect payroll tax calculations can result in penalties and interest from the IRS and state agencies. Employers should correct errors promptly by adjusting future payrolls, filing amended returns if necessary, and making additional deposits. Employees may need corrected W-2 forms (W-2c) if annual totals are affected.