Employer Payroll Taxes in 2026: Every Tax You Need to Know

Federal taxes employers pay on wages

FICA matching — employer's 7.65%

Employers pay the same FICA amount that employees pay — 6.2% Social Security (on first $176,100 in 2026) + 1.45% Medicare on all wages. Unlike employees, employers do NOT pay the additional 0.9% Medicare surcharge for high earners.

FUTA — Federal Unemployment Tax

FUTA rate is 6% on the first $7,000 of each employee's wages. Employers who pay their state unemployment taxes (SUTA) on time receive a 5.4% credit, making the effective federal rate 0.6%. Maximum annual FUTA per employee: $7,000 × 0.6% = $42.

FUTA is reported annually on Form 940. Deposits are required quarterly if accumulated liability exceeds $500.

State taxes employers pay

SUTA — State Unemployment Insurance

All states require employers to pay state unemployment insurance. Rates vary from 0.1% to 14% depending on:

• The state's unemployment fund balance
• Your company's "experience rating" — lower unemployment claims = lower rate
• Industry (construction typically pays higher rates)
• New employer rates: typically 2.7% (varies widely by state)
• Payroll Taxes Guide
• Overtime Rules
• Tax Withholding Guide

SUTA taxable wage bases range from $7,000 (same as FUTA in some states) to $62,000+ in states like Washington, Oregon, and North Dakota.

Workers' compensation insurance

Workers' comp is technically insurance, not a tax, but it's a mandatory employer cost in 49 states (Texas is optional). Rates are calculated per $100 of payroll and vary dramatically by industry and state:

• Clerical workers: $0.20–$0.50 per $100 payroll
• Retail workers: $0.80–$2.00 per $100
• Construction: $5.00–$20.00 per $100

Total employer cost breakdown

Use the Employer Tax Calculator for a precise cost breakdown by state, or the FUTA Tax Calculator for federal unemployment tax specifically.