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An employer is responsible for half of social security tax and half of medicare tax. The misconception people have is that the wage earner, employee, only see's their half of the social security and medicare taxes on their paycheck/W-2. The true social security rate is 12.4%, medicare is 2.9%. Employer pays 1/2, employee pays the other half.
In most states there are other employment taxes, the standard ones being Federal unemployment and State unemployment taxes. These vary by state and by employer. The federal rate is around $75 per employee, and state rates are between .1% to 10% of the first $9,500 in wages (amount of wages vary by state also). Employees normally do not pay these taxes or see them reflected on their paycheck or W-2.
Some states also have a tax/fee for workers compensation insurance and disability insurance. These vary by state, most states employers only pay workers compensation fees/tax/insurance. some states impose a fee/tax for disability, either only on the employer, but some states such as CA impose on employee's also.
The typical employee pays 1/2 of social security and 1/2 of medicare, the employer matches the social security and medicare and pays any other employment related taxes, on average.
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how would i figure out what myself(the employer) will pay for payroll tax. I am hiring a $20/hour sales rep and just wondering what ill be paying. My other workers are all 1099 so i dont know.
Gross Payroll: $100.00 / Employer Social security (6.2%) $6.20 / Employer Medicare (1.45%) $1.45. Total cost to employer base paycheck $107.65
On the first $7,000 in wages FUTA (Federal Unemployment Insurance) tax is due of .6%, $42. After $7,000 in wages no FUTA tax. (depending on which state there is an additional tax due to unfunded unemployment state programs)(this rates is between 0% for AK to a high of .9% for MI and IN) average extra tax in 2011 was .3% so $21.
On the first $9,500 in wages, State Unemployment tax is due (each state has a rate)(average 2.7%) so on first $9,500 in wages annual tax would be $256.50. After $9,500 no additional tax due.
Example, $1,000 paycheck, cost to employer. $1,000 wage + Social security $6.20 + medicare $1.45 + FUTA tax $9.00 + SUTA (state unemployment) $$27.00 = Total cost to employer = $1,043.65
Note some costs are variable and end at certain pay levels.
Other costs to an employer include mandatory workers compensation insurance (depends on state, occupation).