What payroll taxes does an employer pay? The short answer is that an employer generally pays its share of Social Security and Medicare taxes, federal unemployment tax, and any applicable state unemployment or reemployment tax. The employer also withholds employee taxes, deposits the combined amount, files payroll returns, and keeps accurate records. Understanding the difference helps a business budget correctly and avoid missed deadlines.

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What payroll taxes does the employer pay vs. the employee?

Employers and employees share some payroll taxes, while the employer alone pays others. The employer withholds the employee's share from wages, adds the employer's share, and sends the required amounts to the government. Federal income tax is generally an employee tax that the employer withholds, not an extra employer cost.

This distinction matters when an owner estimates the true cost of an employee. Gross wages are only one part of the budget. Employer payroll taxes, benefits, workers' compensation, paid leave, and other employment costs may also apply. For a broader overview of payroll administration, see Accountants Now's payroll services guide for small business employers.

Which payroll amounts affect business cash flow?

Employee withholding and employer payroll taxes affect cash flow in different ways. Withholding comes out of the employee's gross pay, so it is not an additional wage expense for the business. The employer's FICA match, FUTA, and state reemployment tax are additional costs that should be included in the labor budget.

A practical payroll forecast can show gross wages, the estimated employer tax burden, employee withholdings, and the dates when money must leave the business account. That view helps an owner avoid a common mistake: having enough cash to run payroll but not enough cash to make the related tax deposit. It also makes it easier to compare the cost of hiring an employee with the cost of a properly classified contractor.

Worker classification deserves attention before any calculation. A contractor who is truly an independent contractor is generally paid under a different reporting process, while a worker who meets the employee test creates withholding and employer tax duties. When the facts are unclear, ask a qualified professional rather than choosing the classification that appears cheaper.

Federal payroll taxes: FICA and FUTA explained

Federal payroll taxes include taxes shared by the employer and employee, taxes withheld for the employee, and unemployment tax paid only by the employer. For 2026, the IRS lists a 6.2% Social Security rate for each side, a 1.45% Medicare rate for each side, and a 184,500 Social Security wage base.

FICA: Social Security and Medicare

FICA is the Federal Insurance Contributions Act system that funds Social Security and Medicare. In 2026, the employer generally pays 6.2% of taxable wages for Social Security until the employee reaches the annual wage base, plus 1.45% of Medicare wages with no wage base limit. The employer also withholds the employee's matching amounts and deposits the combined totals.

When an employee's wages exceed 200,000 during the calendar year, the employer must begin withholding the 0.9% Additional Medicare Tax on wages above that threshold. This is an employee-only tax. The employer does not match it, but the employer is responsible for starting the withholding at the correct time and continuing it through the end of the year.

FUTA: federal unemployment tax

FUTA is different from FICA because the employee does not pay it. The employer pays FUTA from business funds and reports it on Form 940. The federal rate is 6.0% on the first 7,000 of wages paid to each employee. An employer that pays state unemployment tax on time may generally receive a credit of up to 5.4%, producing an effective rate as low as 0.6% when all requirements are met.

FUTA liability depends on the facts of the business, including the type of workers, wage payments, state payments, and credit-reduction rules. Do not assume that every employer has the same final rate. The IRS FUTA guidance and current Form 940 instructions should control year-specific filing decisions.

State payroll taxes in Florida: what employers owe

Florida does not impose a state personal income tax, so employers usually do not withhold Florida income tax from a W-2 paycheck. Florida employers can still owe a state payroll tax: Florida reemployment tax. It funds the state's unemployment compensation system and is paid by the employer, not deducted from employee wages.

Florida taxes only the first 7,000 of wages paid to each employee in a calendar year for reemployment tax. The rate is assigned by the Florida Department of Revenue based on the employer's circumstances. A new employer's initial rate is 2.7%, and established employers can receive a different experience-based rate. The Florida Department of Revenue states that rates can range from 0.1% to 5.4% under its rate rules.

Florida employers report wages each calendar quarter. The business must register when it becomes liable, keep wage records, file the required quarterly report, and pay by the applicable deadline. A company with workers in other states may also have state unemployment, withholding, or local obligations outside Florida. Worker location and employee classification matter, especially when a business operates remotely or across state lines.

For official Florida thresholds and rate information, review the Florida reemployment tax guidance before preparing a return. Accountants Now also supports employers who need a consistent payroll process across multiple states through its payroll services.

How to calculate employer payroll tax liability

To calculate employer payroll tax liability, start with each employee's taxable wages. Apply the employer share of FICA, add applicable federal and state unemployment taxes on their wage bases, and account for the required deposit and filing schedule. Then check for special rules, credits, multi-state employees, tips, and worker classification.

1. Identify taxable wages. Separate employee wages from payments to properly classified independent contractors and review taxable fringe benefits, tips, and supplemental pay.
2. Calculate the employer FICA share. Apply 6.2% Social Security wages up to the annual wage base and 1.45% Medicare wages without a wage base limit for 2026.
3. Calculate FUTA. Apply the federal unemployment rules to the first 7,000 of each employee's wages, then account for any allowed state-tax credit.
4. Calculate state reemployment or unemployment tax. In Florida, apply the assigned rate to each employee's first 7,000 of annual wages.
5. Add special obligations. Check rules for tips, agricultural or household workers, multiple states, credit-reduction states, and any local requirements.
6. Reconcile deposits and returns. Compare payroll registers, bank payments, Forms 941 and 940, Florida wage reports, and year-end W-2 data.

For example, assume a new Florida employer pays one employee 50,000 in 2026. The employer's FICA estimate is 3,100 for Social Security plus 725 for Medicare, or 3,825. If the employer qualifies for the maximum FUTA credit, FUTA is 42 on the first 7,000. At Florida's 2.7% new-employer rate, reemployment tax is 189 on the first 7,000. The illustrative employer payroll tax total is 4,056 dollars before other employment costs. Actual liability changes with the employer's assigned Florida rate, FUTA credit, taxable wages, and employee circumstances.

See How Accountants Now Handles Payroll Tax and W-2 Filing

When payroll taxes are due: deposit schedules explained

Payroll taxes have separate deposit and reporting deadlines. Federal income tax withholding and both employer and employee FICA taxes generally follow a monthly or semiweekly deposit schedule based on the employer's IRS lookback rules. Form 941 is generally filed quarterly, while Form 940 reports FUTA annually. Florida reemployment wages are reported each quarter.

Deadlines can move when a due date falls on a weekend or legal holiday. Federal tax deposits are generally required electronically. The safest process is to calendar deposits separately from return due dates, then reconcile each payment to the payroll register.

What happens if you miss a payroll tax deposit?

A missed payroll tax deposit can lead to penalties, interest, IRS or state notices, and time-consuming corrections. The business may also have to reconcile why the amount deposited does not match its payroll records. Because withheld employee taxes are held in trust for the government, treating them as available cash creates serious cash-flow and compliance risk.

If a deposit is late, confirm the amount, correct the payroll records, make the payment as soon as possible, and review whether a required return or notice response is also outstanding. Do not wait for a notice before investigating. A payroll professional can help document what happened, calculate the correction, and establish a process that prevents the same deadline from being missed again.

Outsourcing payroll can reduce administrative work, but it does not mean an employer should stop reviewing payroll reports or confirming that deposits and returns were completed. The IRS explains that employer responsibility can continue in third-party payroll arrangements. Choose a provider that makes deadlines and filings visible to the business owner.

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Frequently asked questions about employer payroll taxes

Does an employer pay federal income tax for an employee?

Usually, no. The employer withholds federal income tax from the employee's wages and sends it to the IRS, but the tax is generally the employee's responsibility. The employer must calculate withholding correctly, deposit it on time, and report it.

Does the employer pay Medicare tax?

Yes. The employer generally pays a 1.45% Medicare tax match on taxable wages and withholds a matching 1.45% from the employee. The employer does not match the employee's 0.9% Additional Medicare Tax.

Who pays FUTA tax?

The employer pays FUTA tax from business funds. FUTA is not withheld from employee paychecks. Most employers that meet the applicable tests report it on Form 940 and may receive a credit for qualifying state unemployment tax payments.

Does Florida have a state payroll tax?

Florida has employer-paid reemployment tax, which supports the state's unemployment compensation system. The first 7,000 of each employee's wages is generally the Florida taxable wage base. The assigned rate depends on the employer's circumstances and can change.

Can a payroll service handle these taxes?

Yes, a payroll service can calculate payroll, prepare filings, and make tax deposits under the applicable arrangement. The employer should still review reports, keep records, and understand which duties remain its responsibility. Accountants Now processes payroll through ADP and includes payroll tax and W-2 filing with its payroll service.

A written payroll checklist can assign each deposit, return, and review to a specific person. That simple step makes ownership clear before the next pay period begins.

Payroll taxes become easier to manage when the employer share, employee withholding, wage bases, deadlines, and state rules are tracked in one repeatable process. For South Florida businesses, Accountants Now offers a dedicated team of five accountants, ADP payroll processing, and clear communication through iMessage, video chat, and a secure portal.

Tax rates, wage bases, filing rules, and deposit schedules can change. Use current IRS and Florida Department of Revenue guidance, or speak with a qualified tax professional about your business's situation.