Payroll Taxes for Employers in the US: A Guide

Navigating payroll taxes for employers in the US can be overwhelming when operating across multiple states or managing a growing team.

By leveraging Deel’s unified payroll platform and compliance expertise, you can streamline processes, reduce manual error, and have confidence your payroll stays accurate and fully compliant—no matter which US state you’re operating in.

This guide breaks down essential US payroll tax requirements, defines important tax forms, and highlights key deadlines so that you stay informed and compliant.

US payroll taxes for employers: FICA and Medicare

One of the most significant elements of payroll taxes for employers in the US is the Federal Insurance Contributions Act (FICA) tax. FICA is a law that requires employers to withhold taxes from employee wages to fund Social Security and Medicare, federal government programs built to support Americans with disabilities, in old age, and more.

Social Security: Definition and tax rates

The Social Security tax in the US covers benefits for workers with disabilities, the elderly, and families in which a spouse or parent passes away. All workers and their employers contribute to the social security system so that funds are available when workers need them. The Social Security tax rate for both employers and employees is 6.2%, adding up to a total of 12.4%. This tax rate applies to various types of income, such as salaries, wages, and bonuses.

Social Security tax in the US has a wage base limit, which is a maximum wage subject to Social Security tax for that year. For 2025 income, the wage base limit is $176,100.

Medicare: Definition and tax rates

Medicare taxes go to a separate FICA fund that provides insurance benefits and subsidized healthcare to people over 65 years old and people with disabilities. The Medicare tax rate is 1.45% for both the employer and the employee, adding up to a total of 2.9%.

Unlike Social Security, Medicare tax doesn’t have a wage base limit. However, there is an additional 0.9% tax rate that applies to employees based on their wages and tax filing status. We’ve outlined these conditions in the table below.

US payroll taxes for self-employed: SECA

For those who are self-employed, Social Security and Medicare taxes still apply under the Self-Employed Contributions Act (SECA).

Under SECA, self-employed individuals must pay both the employer and employee shares of FICA taxes. However, the law allows self-employed workers to deduct half of the self-employment tax as a business expense, alleviating some of the tax burden. These contributions ensure that self-employed workers are covered by the same social welfare benefits as traditional, full-time employees.

Unlike traditional employees who pay FICA taxes through withholding, self-employed individuals must pay quarterly estimated taxes, and these payments can go towards paying the self-employment tax.

To better understand the Social Security and Medicare tax rates for self-employed workers, we’ve detailed these rates and how they were calculated.

Social Security tax rates for self-employed workers

Since a self-employed worker is considered both an employer and an employee, their Social Security tax rate is 12.4%, calculated by combining the 6.2% employer rate and the 6.2% employee rate.

The wage base limit also applies to self-employed individuals, meaning the first $176,100 of 2025 earnings are subject to Social Security tax.

Medicare tax for self-employed workers

The Medicare tax for self-employed individuals equals 2.9%, calculated from combining the 1.45% employer rate and the 1.45% employee rate.

Self-employed workers are also liable for an additional 0.9% Medicare tax depending on their tax filing status and wages. The same guidelines and wage thresholds that apply to traditional employees apply to those who are self-employed.

US payroll taxes for employers: Federal Unemployment Tax Act (FUTA)

The Federal Unemployment Tax Act (FUTA) is a federal law that requires employers to pay taxes to fund unemployment benefits for workers who lost their jobs. This federal tax only applies to employers, but the amount owed is based on employee wages.

The FUTA tax rate is 6%, and it applies to the first $7,000 paid to each employee as wages throughout the year. This $7,000 amount is known as the FUTA wage base. The state wage base varies depending on your state’s specific rules.

Employers who pay their share of state unemployment taxes may be eligible for a 5.4% tax credit on FUTA taxable wages. When applied, this tax credit brings employers’ FUTA tax rate down to 0.6%. To qualify for this tax credit, employers must pay their state unemployment taxes in full by the due date of Form 940 and on all the same wages subject to FUTA tax, and they can’t be registered in a credit reduction state. Credit reduction states are those that have not repaid loans from the federal government to pay unemployment benefits.

US Federal and state income tax

While FICA taxes fund social welfare programs and FUTA funds unemployment insurance, federal income taxes go into general funds of the US Treasury. Not every US state collects income tax, but for those that do, those income taxes go into the state’s treasury.

2025 Federal income tax rates in the US

Federal income tax rates in the US are divided into tax brackets defined by taxable income, which is the amount of income after applying deductions and exemptions. There are seven tax brackets with tax rates ranging from 10-37%. The tax rate for each individual depends on their income and their tax filing status as outlined in the table below.

Source: Internal Revenue Service, “Revenue Procedure 2024-40”

Employers are required to withhold federal income tax based on Form W-4, a form completed by employees and submitted to employers to determine the correct withholding amount to deduct from paychecks.

Form W-4 determines the withholding tax by considering whether an employee has multiple jobs, a spouse who also works, dependents, additional income, and other optional adjustments. This form is typically completed annually, anytime an employee starts a new job, or whenever an employee experiences changes in their personal or financial situation.

2025 state income tax rates in the US

State income taxes in the US are determined by each individual state, with average tax rates as low as 2.11% and as high as 7.75%.

Most employers need to withhold estimated tax payments for both federal and state taxes through the payroll process and send them to the Internal Revenue Service (IRS). However, the following states do not collect state income tax:

• Alaska
• Nevada
• Wyoming
• South Dakota
• Texas
• Tennessee
• Florida

Similar to federal income taxes, the amount of state income taxes withheld varies depending on the individual’s income and tax bracket. Graduated tax brackets are common at the state and federal levels with the lowest earners paying fewer dollars in taxes and larger income tax burdens allocated to higher earners.

US employer tax reporting requirements

The main reporting requirements and deadlines that employers in the US need to be aware of are quarterly filings, annual filings, and federal tax deposits.

Quarterly tax filings for employers in the US

Most employers who withhold federal income tax, Social Security, or Medicare taxes must file Form 941 each quarter. This form reports wages, tips, federal income tax withheld, and the employer and employee shares of Social Security and Medicare taxes. The due dates for each quarter are listed below:

• Q1 (January 1 - March 31): Due April 30
• Q2 (April 1 - June 30): Due July 31
• Q3 (July 1 - September 30): Due October 31
• Q4 (October 1 - December 31): Due January 31 of the following year

However, there are a few exceptions to note for quarterly tax filings.

• For small businesses with an annual liability for Social Security, Medicare, and withheld federal income taxes that is $1,000 or less, use Form 944 to file annually instead of quarterly
• Seasonal employers are exempt from filing Form 941 during quarters in which they have not paid any wages. To notify the IRS that you won’t be filing for one or more quarters in the year, check the box on line 18 for every quarter you file Form 941
• Employers of household employees are usually exempt from filing Form 941
• Employers of farm employees don’t need to file Form 941 for agricultural labor wages

If none of these exceptions apply to your business, then you are required to file Form 941 quarterly, regardless if you paid wages during that quarter.

Annual tax filings for employers in the US

Generally, the main forms that employers in the US must file annually include Form 940, Form W-2, Form W-3, Form 1099-NEC, and Form 1096.

• Form 940 is used to report your annual Federal Unemployment Tax Act (FUTA) tax. If you paid wages of $1,500 or more to employees, or if you have one or more employees for at least 20 or more weeks in the year, then you must file Form 940. This form is due on January 31 of the following year.

• Form W-2 is used to report income to federal and state tax authorities and provide a record of tax withholdings to employees. Employers must prepare and furnish Form W-2 to each employee by January 31 of the following year to report wages, tips, and other compensation, as well as federal, state, and local taxes withheld. Employees use this to file their personal income tax returns every year by April 15.

• When filing Form W-2, employers are also required to file Form W-3, which summarizes and reports the total employee wages and withholdings. Form W-3 must be filed with Copy A of all Forms W-2 to the Social Security Administration by January 31 of the following year.

• Form 1099-NEC covers nonemployee compensation and must be filed if you paid $600 or more to an independent contractor for services in the course of your business. Employers must file by January 31 of the following year.

• Form 1096 is used to transmit paper Forms 1099 and a variety of other forms. When filing Form 1096 with Form 1099-NEC, employers must file by January 31 of the following year. It’s important to note that this form is not used to transmit electronically.

Federal tax deposits for employers in the US

Employers in the US are not only responsible for withholding payroll taxes, but they also must deposit those taxes to the IRS electronically through the Electronic Federal Tax Payment System (EFTPS).

There are two deposit schedules, monthly and semi-weekly. You must determine which deposit schedule you are required to use before the beginning of each calendar year. Your deposit schedule depends on your tax liability during a defined lookback period.

If your total employment tax liability during the lookback period is less than $50,000, you’ll deposit monthly. Monthly deposits are due by the 15th of the following month.

If your total employment tax liability during the lookback period is over $50,000, you’ll deposit semi-weekly. The due date for semi-weekly deposits depends on when employees are paid. We’ve listed the different due dates below:

• When payday falls between Wednesday and Friday, deposits are due by the following Wednesday
• When payday falls between Saturday and Tuesday, deposits are due by the following Friday

Special conditions and business tax forms may apply based on your company size and type. Refer to tax information for businesses from the IRS for further guidance.

Consequences for not paying US payroll taxes

Failing to file your payroll taxes accurately and on time leads to penalties. Unless you can provide a reasonable cause for missing a deadline or paying the correct amount, you’ll be subject to a fine. The IRS may also charge interest if you don’t pay the penalty in full.

For example, failing to pay your taxes by the deadline results in a penalty of 0.5% of the unpaid taxes for each month (or part of a month) the tax remains unpaid. This penalty can reach up to 25%.

Other reasons for penalties include:

• Failure to file
• Inaccurate claim for refund
• Failure to deposit employment taxes
• Underpaying estimated taxes
• Incorrectly reporting foreign financial activity

Run US payroll compliantly in all 50 states with Deel

Managing payroll across 50 states and keeping up with changing federal regulations presents non-compliance risks and requires deep expertise for businesses operating in the US.

Deel US Payroll instantly calculates your payroll taxes and integrates seamlessly with your accounting software, delivering accurate paychecks to your employees quickly—no matter which US state you’re operating in.

Request a demo to see how our unified platform enables you to create custom global reports, increase operational efficiency, reduce payroll costs, and stay updated with the latest payroll compliance and tax laws.