How to use the payroll calculator
- Enter the employee’s pay. Choose an annual salary, an hourly wage with weekly hours, or the gross pay for one pay period, then set the pay frequency, filing status and state.
- Enter your state unemployment rate and taxable wage base. Each state sets its own, so the starting values are examples. Replace them with the figures your state assigned you.
- Add optional costs. Open the extra sections for pre-tax deductions, employer health and 401(k) contributions, other employer costs, wages already paid this year and any FUTA credit reduction.
- Read the result. The top number is the employer’s total yearly cost. The tables show the employee’s gross-to-net pay and every employer cost per paycheck, on average and for the full year. Copy the link to share or save your numbers.
What employers pay on top of an employee’s wages
Wages are only part of the cost. In 2026 an employer pays these taxes out of its own funds, in addition to withholding the employee’s taxes:
- Social Security: 6.2% of each employee’s wages up to $184,500, the same amount the employee pays. The most an employer owes per employee is $11,439.00.
- Medicare: 1.45% of all wages, with no cap. The 0.9% Additional Medicare Tax on wages over $200,000 falls on the employee alone; employers have no matching share.
- Federal unemployment (FUTA): 6.0% on the first $7,000 of each employee’s wages, less a credit of up to 5.4% for state unemployment tax paid. The result is 0.6%, or $42.00 per employee. It is never taken from the employee’s pay.
- State unemployment (SUTA): a rate and a wage base set by your state. The IRS notes that your state wage base may differ from the federal $7,000.
On the employee’s side, the employer withholds federal income tax from the Form W-4, the employee’s 6.2% Social Security and 1.45% Medicare, and state income tax where it applies. The IRS calls the income tax and the employee’s share of Social Security and Medicare “trust fund taxes”: they are part of the employee’s wages that you pay to the Treasury instead of to the employee, and failing to withhold or deposit them can bring the trust fund recovery penalty. To see the employee’s side in more detail, use our paycheck calculator.
How the total cost of an employee is calculated
Total cost is the gross wage plus each employer tax, each limited to its own wage base, plus employer benefit costs:
Cost = W + r_ss × min(F, B_ss) + r_m × F + r_f × min(F, B_f) + r_s × min(F, B_s) + E
- W
- gross wages for the year
- F
- wages subject to Social Security, Medicare and FUTA: gross wages minus cafeteria-plan premiums
- r_ss, B_ss
- Social Security rate 6.2% and 2026 wage base $184,500
- r_m
- Medicare rate 1.45%, no wage base
- r_f, B_f
- FUTA rate after credit (0.6% with the full credit) and FUTA wage base $7,000
- r_s, B_s
- your state unemployment rate and taxable wage base
- E
- employer health, 401(k) and other costs, which are not wages
Worked example
An employee earns W = $65,000 paid every two weeks, with no pre-tax deductions, so F = $65,000. Social Security is 6.2% × $65,000 = $4,030 and Medicare is 1.45% × $65,000 = $942.50. FUTA is 0.6% × $7,000 = $42. With the example state rate of 2.7% on the first $9,000, state unemployment is $243. Employer taxes total $5,257.50, so the employee costs $70,257.50 a year, which is 108.1% of gross pay or $2,702.21 per paycheck on average. The employee takes home $54,407.50 a year ($2,092.60 per paycheck) after estimated federal income tax of $5,620, Social Security and Medicare.
Annual employer cost by salary in 2026
Bi-weekly pay, no benefits, no pre-tax deductions, and the example state unemployment figures (2.7% on the first $9,000). Replace the state figures in the calculator to match your state.
| Salary | Social Security + Medicare | FUTA | State unemployment (example) | Employer taxes | Total cost | Cost as % of salary |
|---|---|---|---|---|---|---|
| $30,000 | $2,295 | $42 | $243 | $2,580 | $32,580 | 108.6% |
| $40,000 | $3,060 | $42 | $243 | $3,345 | $43,345 | 108.4% |
| $50,000 | $3,825 | $42 | $243 | $4,110 | $54,110 | 108.2% |
| $60,000 | $4,590 | $42 | $243 | $4,875 | $64,875 | 108.1% |
| $75,000 | $5,738 | $42 | $243 | $6,023 | $81,023 | 108.0% |
| $90,000 | $6,885 | $42 | $243 | $7,170 | $97,170 | 108.0% |
| $100,000 | $7,650 | $42 | $243 | $7,935 | $107,935 | 107.9% |
| $125,000 | $9,562 | $42 | $243 | $9,848 | $134,847 | 107.9% |
| $150,000 | $11,475 | $42 | $243 | $11,760 | $161,760 | 107.8% |
FUTA and state unemployment tax are fixed dollar amounts per employee, so they weigh more on low salaries. As pay rises the ratio settles near 107.65% (wages plus Social Security and Medicare), and once pay passes the Social Security wage base it falls further: a $250,000 salary costs $265,349, or 106.1% of pay.
How FUTA and state unemployment tax work
FUTA is paid only by the employer and is never withheld from an employee’s wages. It applies to the first $7,000 you pay each employee in a year. You can take a credit of up to 5.4% against it, but the IRS says you get the full credit only if you pay your state unemployment taxes in full, on time, and on the same wages that are subject to FUTA, and your state isn’t a credit reduction state.
A credit reduction state is one with an unpaid balance of loans from the federal government, taken to pay unemployment benefits, on January 1 of two or more consecutive years. The Department of Labor explains that the final credit reduction for a year isn’t determined until November 10 of that year, and employers in an affected state pay the normal 0.6% plus the reduction. Check the Department of Labor’s FUTA credit reductions page for the current list, then enter the reduction in the calculator. The IRS requires credit reduction liabilities to be deposited with the fourth-quarter deposit.
| Credit | FUTA rate after credit | FUTA on the first $7,000 |
|---|---|---|
| Full 5.4% credit | 0.6% | $42.00 |
| Credit reduced by 0.3 points (illustration) | 0.9% | $63.00 |
| Credit reduced by 0.6 points (illustration) | 1.2% | $84.00 |
| Credit reduced by 0.9 points (illustration) | 1.5% | $105.00 |
State unemployment tax works differently in every state. Each state assigns an employer its rate, and each sets the wage base. The Department of Labor’s January 2026 summary of state laws shows taxable wage bases ranging from $7,000 to $78,200, so the wage base can change your cost far more than the rate. Find your state’s agency and rate notice through the Department of Labor’s list of state unemployment agencies.
Why payroll cost is highest early in the year
Unemployment taxes stop as soon as an employee’s wages reach the wage base, so the first paychecks of the year cost the most. For the $65,000 example, the first paycheck carries $15.00 of FUTA and $67.50 of state unemployment, and both are finished by paycheck 4.
| Paycheck | FUTA wages | FUTA | State unemployment wages | State unemployment (example) |
|---|---|---|---|---|
| Paycheck 1 | $2,500.00 | $15.00 | $2,500.00 | $67.50 |
| Paycheck 2 | $2,500.00 | $15.00 | $2,500.00 | $67.50 |
| Paycheck 3 | $2,000.00 | $12.00 | $2,500.00 | $67.50 |
| Paycheck 4 | $0.00 | $0.00 | $1,500.00 | $40.50 |
| Paycheck 5 | $0.00 | $0.00 | $0.00 | $0.00 |
| Paychecks 6–26 | $0.00 | $0.00 | $0.00 | $0.00 |
| Full year | $7,000.00 | $42.00 | $9,000.00 | $243.00 |
Higher earners reach each wage base later in the year. The table shows which paycheck (of 26) first covers each base, using the example $9,000 state wage base:
| Salary | Gross pay per paycheck | FUTA base ($7,000) reached | State base ($9,000) reached | Social Security base ($184,500) reached |
|---|---|---|---|---|
| $30,000 | $1,153.85 | Paycheck 7 | Paycheck 8 | Not reached |
| $50,000 | $1,923.08 | Paycheck 4 | Paycheck 5 | Not reached |
| $75,000 | $2,884.62 | Paycheck 3 | Paycheck 4 | Not reached |
| $100,000 | $3,846.15 | Paycheck 2 | Paycheck 3 | Not reached |
| $150,000 | $5,769.23 | Paycheck 2 | Paycheck 2 | Not reached |
| $200,000 | $7,692.31 | Paycheck 1 | Paycheck 2 | Paycheck 24 |
| $250,000 | $9,615.38 | Paycheck 1 | Paycheck 1 | Paycheck 20 |
The $250,000 salary reaches the Social Security base in paycheck 20, so the employer and the employee each stop paying it for the last 6 paychecks of the year. Budget from the average column in the calculator, but expect the first checks of the year to cost more.
How to run payroll, step by step
This is the federal outline from IRS Publication 15 (2026). States add their own registration, withholding and unemployment rules, so check with your state agencies too.
- Get an Employer Identification Number (EIN). You need one to report employment taxes or give tax statements to employees. You can apply online at IRS.gov/EIN.
- Onboard each new employee. Verify work eligibility with Form I-9 from USCIS, record the employee’s name and Social Security number, ask for a 2026 Form W-4, and report the new hire to your state’s new hire registry.
- On each payday, figure gross wages and withhold. Withhold federal income tax using the employee’s Form W-4 and the Publication 15-T tables, and withhold the employee’s Social Security and Medicare (including the 0.9% Additional Medicare Tax on wages over $200,000).
- Deposit the taxes electronically. Deposits of withheld income tax plus both shares of Social Security and Medicare follow a monthly or semiweekly schedule. You are a monthly depositor if your four-quarter lookback total is $50,000 or less, and a semiweekly depositor if it is more. Monthly deposits are due by the 15th of the next month. Semiweekly deposits for Wednesday–Friday paydays are due the following Wednesday, and for Saturday–Tuesday paydays the following Friday.
- File Form 941 each quarter. It reports wages, withheld tax and both employer and employee Social Security and Medicare. If your Form 941 tax for the current or prior quarter is under $2,500, and you had no $100,000 next-day deposit obligation, you can pay with the return instead of depositing.
- Handle FUTA. Figure it each quarter and deposit if the running total is over $500; otherwise carry it forward. No FUTA is owed on an employee’s wages above $7,000. File Form 940 once a year.
- Close out the year. Give each employee a Form W-2 and file the copies with the Social Security Administration. For 2026, both are due February 1, 2027.
2026 payroll filing calendar
| Return or form | Covers | Due date |
|---|---|---|
| Form 941 and FUTA deposit check | Quarter 1 (January–March) | Thursday, April 30, 2026 |
| Form 941 and FUTA deposit check | Quarter 2 (April–June) | Friday, July 31, 2026 |
| Form 941 and FUTA deposit check | Quarter 3 (July–September) | Monday, November 2, 2026 (October 31, 2026 is a Saturday) |
| Form 941 and FUTA deposit check | Quarter 4 (October–December) | Monday, February 1, 2027 (January 31, 2027 is a Sunday) |
| Form 940 (annual FUTA return) | 2026 | Monday, February 1, 2027 (January 31, 2027 is a Sunday), or Wednesday, February 10, 2027 if every FUTA deposit was made on time |
| Forms W-2 and W-3 | 2026 | February 1, 2027 |
Form 941 and quarterly FUTA deposits are due by the last day of the month after the quarter ends. A due date that lands on a weekend or legal holiday moves to the next business day. If you made every deposit on time, you can file Form 941 by the 10th day of the second month after the quarter. Dates come from the IRS calendar in Publication 15 and the W-2 and Form 940 instructions.
The true cost of an employee
Payroll taxes are the predictable part. Benefits and other costs vary by employer, so the calculator takes them as inputs. As an illustration only, here is the same $65,000 employee with $400 per paycheck of employer health insurance, a 3% employer 401(k) contribution and $1,200 a year of other costs (placeholder amounts, not typical figures):
| Cost | Per year | % of salary |
|---|---|---|
| Gross salary | $65,000 | 100.0% |
| Employer Social Security and Medicare | $4,973 | 7.6% |
| FUTA | $42 | 0.1% |
| State unemployment (example rate) | $243 | 0.4% |
| Employer health insurance (assumed) | $10,400 | 16.0% |
| Employer 401(k) contribution (assumed) | $1,950 | 3.0% |
| Other employer costs (assumed) | $1,200 | 1.8% |
| Total cost of the employee | $83,807 | 128.9% |
Employer-paid health insurance and employer contributions to a qualified plan such as a 401(k) generally are not wages for Social Security, Medicare or FUTA, so they add their own cost without adding payroll tax. Other real costs are outside the calculator: recruiting and training, equipment, paid leave, and any workers’ compensation insurance. Enter the ones you want counted under “Other employer costs.” Once you know the loaded cost of labor, our margin calculator shows what you need to charge to cover it, and the salary calculator converts hourly, weekly and yearly pay.
W-2 employee or 1099 contractor?
The IRS says you generally must withhold income tax and Social Security and Medicare from an employee’s wages, pay the employer’s share of Social Security and Medicare, and pay unemployment tax, while you generally do not have to withhold or pay these taxes on payments to independent contractors. That difference is why misclassification draws scrutiny.
Which one a worker is depends on facts, not on what you call them. The IRS groups the evidence into three categories: behavioral (does the company control what the worker does and how), financial (does the payer control the business side of the job, such as pay, expenses and tools) and the type of relationship (contracts, employee-type benefits, and whether the work is a key part of the business). No single factor decides it. If you treat an employee as a contractor and have no reasonable basis for doing so, you may be liable for employment taxes for that worker.
If it is unclear, either the business or the worker can ask the IRS for a determination on Form SS-8, which the IRS says can take at least six months. For payments of $2,000 or more made in 2026 to a contractor for services to your business, you generally file Form 1099-NEC instead of a W-2. Read the IRS’s independent contractor or employee guidance before relying on a contractor arrangement; this page is not legal advice.
What this calculator leaves out
- Withholding precision. Employee income tax is the year’s estimated liability spread evenly, not the result of the IRS Publication 15-T tables for a specific Form W-4. Dependents, extra withholding and local taxes are not modeled.
- State rules for unemployment tax. Rates, wage bases and what counts as wages are the state’s. We assume state unemployment wages equal FUTA wages and apply the rate and base you enter.
- Other employer charges. Workers’ compensation, state or city employer payroll charges, paid leave programs, and employee-paid state contributions such as disability insurance are not calculated. Some state notes are shown under the results where our data has them.
- Overtime, bonuses and uneven pay. Pay is level in every paycheck. See the overtime calculator and the bonus tax calculator for those cases.
- 401(k) details. Deferrals are capped at the 2026 employee limit with no catch-up, and spread evenly through the year.
This is an estimate for planning, not payroll, tax or legal advice. A payroll provider or tax professional can confirm your exact obligations.
Frequently asked questions
What payroll taxes do employers pay?
Employers pay Social Security tax of 6.2% on wages up to $184,500, Medicare tax of 1.45% on all wages, federal unemployment tax (FUTA) and state unemployment tax. They also withhold and deposit the employee’s income tax and the employee’s matching Social Security and Medicare. On a $65,000 salary, the employer-only taxes come to $5,258 a year with our example state figures.
How much does an employee cost on top of salary?
Payroll taxes alone add about 8.1% to a $65,000 salary in our example, for $70,258 a year. Benefits add more: with $400 per paycheck of employer health insurance, a 3% 401(k) contribution and $1,200 of other costs, the same employee costs about $83,807, or 128.9% of salary. Your state rate and benefits set your real figure.
Do employers pay Social Security tax on the whole salary?
No. Employers pay the 6.2% Social Security tax only on each employee’s wages up to the 2026 wage base of $184,500, a maximum of $11,439.00 per employee. Medicare tax of 1.45% applies to all wages. The extra 0.9% Additional Medicare Tax on wages over $200,000 is charged to the employee only; there is no employer share.
How is FUTA tax calculated in 2026?
FUTA is 6.0% of the first $7,000 you pay each employee in a year, reduced by a credit of up to 5.4% when you pay state unemployment tax in full and on time. That leaves 0.6%, or $42.00 per employee. Only the employer pays it. If your state is a credit reduction state, the credit shrinks and you owe more; the Department of Labor publishes the reductions.
What is my state unemployment tax rate and wage base?
Your state assigns both, which is why this calculator asks you to enter them. The rate appears on the notice from your state workforce agency, and the wage base is set by state law. The Department of Labor’s January 2026 summary lists taxable wage bases from $7,000 to $78,200, so our defaults (2.7% on $9,000) are placeholders, not any state’s figures.
When are payroll taxes due?
Deposit dates depend on your schedule: monthly depositors pay by the 15th of the following month, semiweekly depositors by the following Wednesday or Friday depending on the payday, and any day with $100,000 or more of accumulated tax requires a deposit by the next business day. Form 941 is due quarterly by April 30, July 31, October 31 and January 31, Form 940 by January 31, and 2026 Forms W-2 by February 1, 2027. Weekend dates move to the next business day.
Do employer 401(k) and health insurance contributions add payroll tax?
No. Employer-paid health insurance and employer contributions to a qualified plan, such as a 401(k) match, generally are not wages for Social Security, Medicare or FUTA, so they add cost but no payroll tax. An employee’s own traditional 401(k) deferrals are still wages for those taxes. Employee premiums paid through a Section 125 cafeteria plan may qualify for exclusion from those wages, which lowers both the employee’s and the employer’s taxes.
Is a 1099 contractor cheaper than a W-2 employee?
Employer payroll taxes are generally not owed on contractor payments, but you can’t simply choose the label. The IRS decides whether a worker is an employee or contractor by looking at behavioral control, financial control and the relationship of the parties. If you treat an employee as a contractor without a reasonable basis, you may owe the employment taxes for that worker. Use this calculator to see the true employee cost, then check the IRS guidance.