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

For 2026, employers pay: (1) Social Security match — 6.2% of wages up to $176,100 per employee (max $10,918.20 per employee). (2) Medicare match — 1.45% of all wages, no wage cap. (3) FUTA — 0.6% net federal unemployment tax on first $7,000 of wages per employee (max $42). (4) SUTA — state unemployment tax, typically 2.7% for new employers on the first $7,000–$12,000+ of wages depending on state. These taxes add roughly 7–12% above base salary for most employees.

What is FUTA and how much does it cost per employee?

FUTA (Federal Unemployment Tax Act) funds the federal unemployment insurance program. The gross FUTA rate is 6.0%, but employers in states that pay their SUTA (state unemployment) in full receive a 5.4% credit, making the net FUTA rate 0.6%. It applies only to the first $7,000 of each employee's annual wages, making the maximum FUTA cost $42 per employee per year. FUTA is paid entirely by the employer — it is never deducted from employee paychecks.

How much does workers compensation insurance cost?

Workers compensation premium is calculated as: (annual payroll ÷ 100) × rate per $100 payroll. Rates vary dramatically by job class and state. Low-risk office/clerical workers cost around $0.18–$0.35 per $100 payroll, while high-risk construction or roofing workers can cost $8–$25+ per $100 payroll. Use our dedicated Workers Comp Calculator for an estimate based on specific job classification and state.

Do employers pay Medicare on all wages with no cap?

Yes. Unlike Social Security, there is no wage base cap on Medicare. Employers pay 1.45% Medicare match on every dollar of employee wages, regardless of amount. For high-earning employees, the employer owes Medicare match on all wages — for a $300,000 salary, the employer pays $4,350 in Medicare match alone. Note: the Additional Medicare Tax (0.9% surcharge) only applies to the employee side — employers do not pay the additional 0.9%.

Employer Payroll Tax Calculator 2026

See the true cost of each employee — salary plus employer FICA, FUTA, SUTA, and workers comp estimate.
Based on 2026 IRS rates. All 50 states.

Last updated: September 2026 — rates sourced from IRS, SSA & state revenue departments

Employee Cost Details 2026 Rates

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Number of Employees at This Rate

Set to 1 for per-employee breakdown; increase to see total team cost

What Employers Pay in Payroll Taxes in 2026

A $60,000 salary does not cost an employer $60,000 per year. Mandatory employer-side payroll taxes add roughly 8–10% on top of wages — meaning the true cost before benefits is $64,800–$66,000 for a $60,000 employee. Add health insurance, retirement matching, and PTO, and the total can reach $75,000–$85,000.

Employer Payroll Tax Breakdown (2026)

Tax	Rate	Wage Limit	Max per Employee
Social Security (OASDI)	6.2%	$176,100	$10,918.20/yr
Medicare (HI)	1.45%	No limit	No cap
FUTA (federal unemployment)	6.0% (net 0.6%*)	$7,000	$42/yr net
SUTA (state unemployment)	Varies by state + history	$7,000–$56,500	Varies widely

* Net FUTA is 0.6% after the standard 5.4% state unemployment credit. Employers in states with FUTA credit reduction (outstanding federal loans) pay a higher rate.

True Total Cost of an Employee: Worked Example

For a $65,000/year employee in Texas (no state income tax, new employer SUTA rate 2.7%):

Base salary: $65,000
Employer Social Security (6.2% × $65,000): $4,030
Employer Medicare (1.45% × $65,000): $943
FUTA net (0.6% × $7,000): $42
SUTA (2.7% × $9,000 TX wage base): $243
Total mandatory taxes: $5,258 (8.1% of salary)
Total employer payroll cost: $70,258
Payroll Taxes Guide
Overtime Rules
Tax Withholding Guide

Add average benefits: health insurance (~$7,000 employer contribution), 3% 401(k) match ($1,950), and PTO (15 days × $250/day = $3,750), and total compensation cost reaches approximately $82,958/year for a $65,000 salary.

FUTA vs SUTA: Key Differences

FUTA (Federal Unemployment Tax Act) is paid entirely by the employer at 6.0% on the first $7,000 of each employee's wages. Employers that pay state unemployment taxes on time receive a 5.4% credit, making the net FUTA rate just 0.6% — a maximum of $42 per employee per year. FUTA is the same rate in every state.

SUTA (State Unemployment Tax Act) varies by state wage base ($7,000–$56,500), new employer rate (typically 1%–3.5%), and your experience rating after 3 years of claims history. High-turnover businesses or those with significant layoff history pay higher rates; businesses with few claims are rewarded with lower rates.

How to Reduce Employer Payroll Tax Cost

Hire contractors (1099) — contractors handle their own FICA taxes (15.3% self-employment tax), and you pay no FUTA, SUTA, or employer FICA. However, misclassification carries significant penalties — only use 1099 for genuinely independent contractors.
Reduce SUTA rate through low turnover — your experience rating improves over 3 years of low claims. Voluntary contributions to your SUTA account can also lower your rate in some states.
Use pre-tax benefit plans — employer contributions to health insurance, HSA, and 401(k) are not subject to FICA. Offering richer benefits in lieu of wages reduces the FICA-taxable wage base.
Section 125 cafeteria plans — employee pre-tax benefit elections (health, dental, FSA) reduce the employee's FICA wage base, which also reduces the employer's matching FICA obligation.

For an accurate workers comp estimate by job class, see the Workers Comp Calculator. For employee take-home pay, see the Payroll Tax Calculator. For the full cost including benefits, see the Employee Cost Calculator.

Results Per Employee / Year

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Disclaimer: Employer cost estimates are based on 2026 IRS rates, SSA wage base, and average new-employer SUTA rates. Workers comp is estimated at 1.5% — actual rates vary by state and job class. Not tax or legal advice.