Which Payroll Taxes Are Paid by Employers and Have No Employee Paid Portion?

Payroll taxes help pay for Social Security, Medicare, and jobless aid. Some are split between workers and employers. Others, like FUTA and SUTA, are payroll taxes employers must pay on their own. These taxes help workers who lose their jobs.

To follow tax rules, businesses must handle payroll taxes the right way. This means correct math, on-time payments, and the right forms. Good records are a must. If payroll taxes employers owe are not paid correctly, the business can face big fines or legal trouble.

What Are Payroll Taxes?

Payroll taxes are taken from workers’ pay and paid by employers. They fund programs like Social Security, Medicare, and unemployment. Some are shared, others are only paid by the employer. Knowing which taxes to pay is important for running your business and following tax rules.

Payroll Taxes Employers Must Pay with No Employee Contribution

Below are the payroll taxes that employers pay without any help from employees.

1. Federal Unemployment Tax Act (FUTA)

The FUTA tax is paid only by the employer. It helps fund jobless benefits.

• Tax Rate: FUTA is 6.0%. Employers may get a credit of 5.4%, lowering the rate to 0.6%.
• Taxable Wages: FUTA applies to the first $7,000 of an employee’s pay.

Employers pay FUTA taxes once a year or quarterly.

2. State Unemployment Tax Act (SUTA)

SUTA is like FUTA, but it’s paid only by the employer. It funds state unemployment benefits. Rates and rules vary by state.

• Tax Rate: The rate depends on the state and employer’s past claims.
  
• Taxable Wages: Each state sets a limit on wages for SUTA.
  
• Employers should check their state’s rate and limits.
  

3. Employer’s Share of Medicare Taxes

Employers match the Medicare tax paid by workers. They also pay extra taxes on high earnings.

• Tax Rate: 1.45%, matched by the employer.

• Additional Tax: Employers pay an extra 0.9% on pay over $200,000 for singles or $250,000 for couples.

4. Social Security Tax (Employer Share)

Both the employer and worker pay this tax. The employer must match the worker’s share.

• Rate: 6.2% for each.

• Limit: Only applies to the first $160,200 of wages in 2025.

5. Workers’ Compensation Insurance

This insurance is not a tax, but employers must pay it. It covers injuries and illnesses at work.

• Tax Rate: The cost depends on the job and the risks.
  
  
• Taxable Wages: The taxable wage base varies by state.
  

6. Family and Medical Leave Insurance (State-Level)

Some states require employers to pay into family and medical leave insurance. This covers paid leave for medical or family needs.

• Tax Rate: The state sets the rate.
  
• Taxable Wages: Each state has its own limits.
  

7. Local Payroll Taxes (Where Applicable)

In some places, employers must pay local taxes that fund city or county services. These taxes are not shared with employees.

• Tax Rate: It depends on the local area.
  
• Taxable Wages: These taxes may apply to all or part of an employee’s pay.

Employers must check local rules to know if these taxes apply.

How to Calculate Federal Payroll Taxes

To calculate federal payroll taxes, employers follow a few steps:

1. Adjust Employee Wages

• Adjust wages if the employee has extra income or deductions.
  

2. Use IRS Wage Tables

• Check the IRS wage bracket tables in Publication 15-T. Find the amount to withhold based on the adjusted wages.
  

3. Apply Tax Credits

• If the employee claims tax credits for dependents, subtract them from the withheld amount.
  

4. Final Withholding

• Add any extra withholding that the employee requests.
  

For those earning over $100,000, employers may use a different method. Payroll taxes employers handle can be complex, but tools like ADP can help simplify the process.

Additional Payroll Tax Obligations for Employers

As pay periods go by and payroll taxes are taken from paychecks, along with the employers. Businesses may need to file tax forms with federal, state, or local offices. IRS Form 941, the quarterly return, is due on the last day of the month after each quarter ends. For example, if Q1 ends on March 31, the form is due by April 30. Payments are made through the Electronic Federal Tax Payment System® (EFTPS). At the end of the year, employers send Form W-2 to employees and Form 1099-MISC to contractors.

They may also file these forms:

• Form W-3:  shows total W-2 pay for all workers to the SSA
• Form 1096: a summary form that goes with paper-filed IRS forms
• Form 944: used by some to file payroll taxes once a year, not each quarter

Importance of Payroll Taxes for Employers

• Employee Benefits: Payroll taxes fund programs like Social Security and Medicare. These help workers with health care and money.
• Legal Rules: Employers must pay taxes like Social Security and Medicare. Not paying can lead to fines.
• Employer’s Share: Employers match workers’ Social Security (6.2%) and Medicare (1.45%) taxes. This helps fund these programs.
• Recordkeeping: Employers need to keep clear records and file taxes on time. This avoids fines.
• Avoiding Penalties: Paying taxes on time stops extra fees and charges. It protects the business.
• Economic Help: It funds services that help workers and businesses. Employers help the economy by paying taxes.

Payroll taxes are a key part of running a business. Some are split between the employer and the worker. Others are paid only by the employer. These include FUTA, SUTA, the employer’s share of Social Security and Medicare, workers’ compensation, and state leave programs. Knowing these taxes helps you follow the rules and support your team. Meru Accounting can help with payroll tax work, making sure numbers are right, forms are filed on time, and laws are followed.

FAQs 

1. What payroll taxes do employers pay without any employee contribution?Employers pay all of FUTA, SUTA, workers’ compensation, and some state-level leave taxes.

2. Do employers pay the full amount of Social Security and Medicare taxes?
   No, but they must match what the worker pays. Employers pay 6.2% for Social Security and 1.45% for Medicare. They also pay the extra Medicare tax when required.

3. How often must employers pay FUTA taxes?
   Employers pay FUTA taxes either yearly or quarterly, depending on the total tax amount.

4. Are there any local payroll taxes employers must pay?
   Yes, some local areas require employers to pay payroll taxes to fund local programs.

5. How do employers determine their SUTA rate?
   SUTA rates depend on the state and the employer’s past claims.

6. Do employers have to pay family and medical leave insurance taxes?
   Yes, if the state has a family and medical leave program, employers must pay into it.

7. Why are payroll taxes important for employers?
   Payroll taxes fund programs like jobless benefits and healthcare, and help businesses follow tax rules.