Payroll tax
Every tax that comes with paying wages: Social Security, Medicare, federal and state unemployment, plus withheld income tax.
Pay someone wages and a set of taxes comes with it. The employer pays some, takes others out of the employee's pay, and deposits all of them. Together they are payroll tax.
- Social Security and Medicare (FICA): 6.2% and 1.45%, owed by employer and employee alike. Social Security stops at $184,500 of wages in 2026.
- Federal unemployment (FUTA): only the employer pays, usually 0.6% of the first $7,000.
- State unemployment: in most states the employer alone pays it, at a rate and wage base the state sets.
- Income tax withholding: federal, and state too in most states, taken out of the employee's pay.
Deposit timing is in Publication 15. A typical small employer is a monthly depositor, paying each month's taxes by the 15th of the next month (June's by July 15), and Form 941 goes in every quarter.
If you own an S corp, payroll tax on your salary takes the place of the self-employment tax a sole proprietor pays on all profit. Pay yourself $40,000 in Texas and the employer's share is $3,345, with another $3,060 withheld from you. Running payroll also costs something to administer.