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Payroll Tax Calculator

Calculate net pay after all payroll taxes including FICA, Medicare, federal and state withholding, and other deductions. Essential for employers and employees to understand payroll tax obligations.

Gross Pay ($)
FICA (%)
Medicare (%)
Federal Withholding ($)
State Withholding ($)
Other Deductions ($)
Payroll Tax Summary
Gross Pay:$5,000.00
FICA (6.2%):$310.00
Medicare (1.45%):$72.50
Federal Tax:$600.00
State Tax:$200.00
Other Deductions:$100.00
Total Deductions:$1,282.50
Net Pay:$3,717.50
Employer Tax Total (match):$382.50

What Are Payroll Taxes?

Payroll taxes are taxes imposed on employers and employees that fund Social Security, Medicare, unemployment benefits, and other government programs. Employers are responsible for withholding employee portions, paying employer portions, and depositing all amounts to tax authorities on schedule.

Understanding payroll taxes is essential for calculating accurate net pay, budgeting for labor costs, and maintaining compliance with federal, state, and local tax laws.

Payroll Tax Formula

Net Pay = Gross Pay - (FICA + Medicare + Federal Withholding + State Withholding + Other Deductions)

Employer Tax Total = Employee FICA Match + Employee Medicare Match

Frequently Asked Questions

What are payroll taxes?
Payroll taxes are taxes employers withhold from employee wages and taxes employers pay themselves. They include FICA (Social Security and Medicare), federal income tax withholding, state income tax, and other local taxes.
How do you calculate net pay from gross pay?
Net Pay = Gross Pay - FICA (employee portion) - Medicare - Federal Withholding - State Withholding - Other Deductions. Employers also pay a matching portion of FICA and Medicare.
What is the FICA tax rate?
FICA consists of Social Security at 6.2% and Medicare at 1.45%, totaling 7.65% for both employee and employer. The Social Security portion is capped at the annual wage base ($168,600 in 2024).
What is the difference between FICA and Medicare tax?
FICA includes both Social Security (6.2%) and Medicare (1.45%). The Medicare portion has no wage cap and an additional 0.9% surcharge applies to high-income employees (over $200,000 single).
How does payroll frequency affect taxes?
Payroll frequency affects the timing of tax deposits but not the total amount. Employers must deposit taxes according to IRS schedules (semi-weekly or monthly) based on total tax liability.
What is federal income tax withholding?
Federal income tax withholding is based on the employee's W-4 form, filing status, and earnings. The IRS provides withholding tables that employers use to determine the correct amount.
How do state withholding taxes work?
Most states have their own income tax withholding requirements. Rates vary by state, with some states having flat rates and others using progressive brackets. Eight states have no income tax.
What are employer payroll tax responsibilities?
Employers must withhold employee taxes, pay matching FICA (7.65%), pay FUTA (0.6-6%), pay SUTA (varies by state), file quarterly Form 941, provide W-2s annually, and deposit taxes on time.
What is self-employment tax?
Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) paid by self-employed individuals. Unlike employees who split with employers, self-employed individuals pay both portions.
How do you calculate employer payroll tax total?
Employer Payroll Tax Total = Employee FICA Match + Employee Medicare Match + FUTA + SUTA + any state-specific employer taxes (such as disability or paid family leave).
What is the Social Security wage base?
The Social Security wage base is the maximum amount of earnings subject to Social Security tax. For 2024, it is $168,600. Earnings above this amount are not taxed for Social Security.
How do additional Medicare taxes work?
Employees pay an additional 0.9% Medicare surtax on wages over $200,000 (single), $250,000 (married filing jointly). Employers do not match this additional amount.
What is FUTA and who pays it?
FUTA (Federal Unemployment Tax Act) is paid solely by employers at a maximum rate of 6% on the first $7,000 of wages. Credits reduce the effective rate to 0.6% for compliant employers.
What is SUTA and how is it calculated?
SUTA (State Unemployment Tax Act) rates vary by state and employer experience rating. Rates typically apply to a state-specific wage base and range from 0.5% to over 5%.
How do payroll deductions affect take-home pay?
Pre-tax deductions (401k, health insurance, FSA) reduce taxable income, lowering both income tax and FICA. Post-tax deductions (Roth IRA, garnishments) do not reduce taxable income.
What is the difference between exempt and non-exempt employees?
Exempt employees are salaried and not entitled to overtime. Non-exempt employees must be paid overtime at 1.5× their regular rate for hours over 40 per week. Both are subject to payroll taxes.
How do you handle payroll taxes for bonuses?
Bonuses can be taxed using the percentage method (flat 22% federal) or the aggregate method (added to regular wages). Both are subject to FICA and Medicare taxes.
What are payroll tax deposits and due dates?
Employers deposit payroll taxes on a semi-weekly or monthly schedule based on total tax liability. Form 941 is filed quarterly, and Form 940 for FUTA is filed annually.
How do you correct payroll tax errors?
Errors are corrected using Form 941-X (adjusted quarterly return) or Form W-2c (corrected W-2). Overpayments can be refunded or applied to future deposits.
What is the penalty for late payroll tax deposits?
Penalties range from 2% to 15% of the underpayment, depending on how late the deposit is made. The IRS also charges interest on unpaid amounts.
How do payroll taxes vary by business entity type?
S-corp owners paid as employees are subject to payroll taxes. LLC members may be subject to self-employment tax. C-corp owners are treated as employees for payroll purposes.
What are local payroll taxes?
Some cities and counties impose local payroll taxes (e.g., New York City, San Francisco, Philadelphia). These are typically small percentages of wages and are withheld from employee pay.
How do you set up payroll tax withholding?
Obtain an EIN, register with state tax agencies, have employees complete W-4 and I-9 forms, set up a payroll system, and begin withholding based on IRS and state tables.
What is the due date for payroll tax deposits?
Monthly depositors pay by the 15th of the following month. Semi-weekly depositors pay within 2-3 business days after payday. The schedule depends on the lookback period.
How do payroll taxes affect business budgeting?
Payroll taxes typically add 8-10% to total labor costs. Employers should budget for FICA matching (7.65%), FUTA (0.6%), SUTA (1-5%), and any state-specific employer taxes.
What is the role of a payroll service provider?
Payroll providers handle tax calculations, withholding, deposits, filings, W-2 preparation, and compliance. They reduce error risk but the employer remains ultimately responsible.
How do you reconcile payroll tax accounts?
Quarterly reconciliation compares total wages, taxes withheld, and taxes deposited against Form 941. Annual reconciliation verifies W-2 totals match quarterly filings.
What are common payroll tax mistakes?
Common mistakes include incorrect employee classification, wrong tax rates, missed deposit deadlines, incorrect wage base calculations, and failure to report fringe benefits.
How do international employees affect payroll taxes?
International employees may be subject to different tax treaties, visa-specific rules, and additional reporting. Employers should consult tax professionals for cross-border payroll.
What is the future of payroll tax administration?
Automation, real-time payroll processing, and digital tax filing are reducing administrative burden. The IRS is moving toward a more digital system with initiatives like Information Reporting.
How do you calculate payroll taxes for tipped employees?
Tipped employees must report tips to employers. Employers withhold taxes on reported tips and must ensure total pay (cash wages + tips) meets minimum wage requirements.

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