Employer payroll tax calculator 2026

What an employee costs beyond the paycheck

The wage on an offer letter is not what the business pays. On top of it come the employer’s share of Social Security and Medicare, federal and state unemployment taxes, and usually a workers’ compensation premium and some benefits. Together they add to the wage: in the default example, 9.6% on $60,000. This calculator is for the owner of a small business who needs a number for a hire, a freelancer weighing an employee against a contractor, and a manager building a budget.

What payroll taxes does an employer pay on top of wages?

Four, in most cases. The employer's half of FICA is 6.2% Social Security tax on wages up to $184,500 in 2026, and 1.45% Medicare tax on all wages. Then comes the federal unemployment tax (FUTA), and then your state's unemployment tax (SUTA). Many employers also carry workers' compensation insurance, which is a premium rather than a tax but belongs in the cost of an employee. The employee's matching 6.2% and 1.45% are withheld from their pay and are not an extra cost to you; the calculator shows only the employer side.

What is the Social Security wage base for 2026?

$184,500. IRS Publication 15 for 2026 states the limit and the 6.2% rate for each of the employer and the employee (12.4% in total). Wages above the base are free of Social Security tax but remain subject to Medicare tax. For an employee paid $250,000 the employer's Social Security tax is capped at $11,439 ($11,439 is the most the employer can owe for one employee in 2026); Medicare is $3,625 on the full amount. The employer does not pay a share of the 0.9% Additional Medicare Tax that the employee owes on wages above $200,000; the IRS states there is no employer match for it.

How does FUTA work, and why is it only $42 per employee?

IRS Publication 15 says the 2026 FUTA rate is 6% on the first $7,000 of each employee's pay. You can take a credit of up to 5.4% for state unemployment tax you paid in full and on time, which brings the rate to 0.6%. That is $42 per employee per year at most ($7,000 × 0.6%). If your state still owes the federal government for unemployment loans it is a "credit reduction state": the credit shrinks, and the extra tax is due with the fourth-quarter deposit (Schedule A of Form 940). With a credit reduction of 0.3 percentage points, FUTA for a $60,000 employee is $63 instead of $42. The 0.3 points is an example; enter the real figure for your state from the Form 940 instructions. Employees do not pay FUTA and nothing is withheld from their pay.

What do I enter for state unemployment (SUTA) and workers' comp?

Both are set outside the federal system. Each state sets its own SUTA wage base (Publication 15 notes that your state wage base may differ from the $7,000 federal base) and gives each employer its own rate based on its history, so use the rate on your state notice. In the calculator's default example, 2.7% on the first $9,000 gives $243; those two numbers are illustrations, not any state's rates. Workers' compensation premiums are charged per $100 of payroll by class of work and vary widely; the default $1.50 per $100 gives $900 on $60,000. Take the figure from your insurance quote or your state rate.

How much does a $60,000 employee really cost?

With the default numbers the employee costs $65,775 a year, which is 9.6% above the wage. The pieces: Social Security $3,720, Medicare $870, FUTA $42, SUTA $243 and workers' compensation $900, a total of $5,775 beyond the $60,000 wage. That is $5,481 a month. The calculator has a "benefits" box for the health insurance premium or retirement match that you pay on top; it adds them without further tax.

When are these taxes paid and reported?

Employers report FICA taxes and the income tax withheld on Form 941 and deposit them on a schedule set by the size of the liability. FUTA is reported yearly on Form 940, due January 31 (February 10 if all FUTA tax was deposited on time). If the FUTA liability for a calendar year is over $500 you must deposit at least one quarterly payment, by the last day of the month after each quarter ends; the fourth-quarter amount is due with Form 940. These dates are from IRS Topic 759 and Publication 15; the calculator gives yearly amounts and does not schedule deposits.

What does this calculator leave out?

Part-year employees (enter the wages actually paid to the person in the calendar year), workers who changed jobs during the year, state payroll taxes other than unemployment tax, local payroll taxes, hiring tax credits, and the cost of recruiting, equipment and training. It also assumes that all the wages are subject to FICA and FUTA; some kinds of pay and some kinds of work are excluded by law, and Publication 15 explains which. For the employee's side, use the paycheck calculator.

Common mistakes

Applying the 6.2% Social Security rate above the $184,500 base: the employer pays none on the excess. Applying FUTA to all wages instead of the first $7,000. Forgetting that the FUTA credit depends on paying state unemployment tax in full and on time: a late payment can reduce it. Using a state’s average SUTA rate instead of your own notice. Leaving workers’ compensation out of a budget because it is an insurance bill rather than a tax. And counting the employee’s withheld FICA as an additional cost: it is taken from the employee’s pay.

An estimate for planning only — not payroll, legal or tax advice; your returns and your insurer decide. Sources: IRS Publication 15 (2026), Employer’s Tax Guide: Social Security and Medicare rates, the $184,500 wage base, “Figuring FUTA tax” (6.0%, credit up to 5.4%, first $7,000, credit reduction states), Form 940 timing; IRS Topic no. 759, Form 940 — Employer’s Annual Federal Unemployment (FUTA) Tax Return (reviewed September 24, 2026); IRS Understanding Employment Taxes (no employer match for the Additional Medicare Tax); checked October 27, 2026. See the employee’s side in the paycheck calculator, a self-employed person’s version in the self-employment tax calculator, the salary calculator and the overtime calculator. How we check our calculators.