What Are Employer Payroll Taxes?

Employer payroll taxes are contributions that companies must make to various tax programs that benefit their employees. These include the Social Security tax, Medicare tax, federal unemployment tax, and state unemployment tax.

Social Security Tax:

Social Security payroll taxes are a shared responsibility between the employer and the employee. Employers must pay 6.2 percent of each employee’s wages towards Social Security taxes, and employees must match that amount.

Medicare Tax:

Similar to the Social Security tax, the Medicare tax is also a shared responsibility between the employer and the employee. Both parties are responsible for 1.45 percent of an employee’s wages.

Federal Unemployment Tax:

The Federal Unemployment Tax is solely an employer payroll tax. Employers must pay 6 percent of the first $7,000 of each employee’s annual wages towards this tax.

State Unemployment Tax:

State unemployment taxes are also a responsibility that rests solely with the employer, except in certain states such as Alaska, New Jersey, and Pennsylvania. To determine your state’s specific unemployment tax rate, please consult your state’s Department of Labor website.