Employer Payroll Taxes

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Employer Payroll Taxes

What are Employer Payroll Taxes?

Employers are liable to contribute a portion of payroll taxes which are deducted from the employee’s gross pay which will be then paid to the government, such contributions of payroll taxes are known as Employer Payroll Taxes or Employment Taxes. Employers are accountable for paying such taxes so that the employee(s) remain compliant with the Internal Revenue Service (IRS) and Department of Labor If the employer fails in their responsibility they may be subject to criminal and civil sanctions.

Social Security Tax

According to the current Internal Revenue Service (IRS) rate, employees and employers must pay 6.2% each.


For Medicare, the rate described by the Internal Revenue Service (IRS) is 1.45% for both employees and employers.

Federal Unemployment tax

Federal unemployment tax is not deducted from an employee’s gross pay. According to the Federal Unemployment Tax Act (FUTA), only employers are liable to pay 6% of the initial $7,000 paid to the employee annually.

State Unemployment Tax

State Unemployment taxes vary from state to state. According to the State Unemployment Tax Act (SUTA), SUTA is only paid by employers excluding Pennsylvania, New Jersey, and Alaska where both employee and employer pay the tax.

Effect on the employee if the employer doesn't pay Employer payroll taxes?

The evasion of employer payroll taxes can have a serious impact on an employee and the employer. The employee will experience hardship as they will not be eligible or qualify for Social Security, Medicare, or Unemployment benefits.

Related: Payroll Features PayrollPayroll Software, Payroll ActivitiesPayroll ServicesPayroll Tax Rates, Self Employment TaxALE

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