How it's calculated
For one employee, the calculator works out the four payroll taxes the employer pays out of its own pocket, paycheck by paycheck, from January 1:
- Social Security: 6.2% of pay until the employee's pay for the year reaches $184,500, then nothing.IRS
- Medicare: 1.45% of all pay. There is no employer share of the Additional Medicare Tax on pay over $200,000; only the employee pays that.
- Federal unemployment (FUTA): 0.6% of the first $7,000 of pay after the full 5.4% credit for state unemployment tax, plus any credit reduction for the state.IRS
- State unemployment (SUI): the state's rate on pay up to the state's wage base. The calculator uses the 2026 new-employer rate unless you enter your own.U.S. DOL
Because three of the four taxes stop at a wage base, the employer's cost per paycheck is highest at the start of the year and drops once each base is reached. The paycheck-by-paycheck table shows exactly when.
The formula
For each paycheck, with pay to date meaning pay in earlier paychecks this year:
- Taxable pay under a wage base = min(pay to date + this paycheck, wage base) − min(pay to date, wage base).
- Social Security = 6.2% × taxable pay under the Social Security wage base.
- Medicare = 1.45% × the paycheck.
- FUTA = (0.6% + credit reduction) × taxable pay under $7,000.
- State unemployment = state rate × taxable pay under the state wage base.
The yearly figures are the sums over all paychecks.
Worked example
A $60,000 employee in Texas, paid every two weeks, costs the employer $4,875 in payroll taxes for the year: $252.69 on the first paycheck, falling as FUTA and Texas unemployment tax hit their wage bases.
| Line | First paycheck | Last paycheck | Year |
|---|---|---|---|
| Gross pay | $2,308 | $2,308 | $60,000 |
| Social Security (6.2% employer share) | $143 | $143 | $3,720 |
| Medicare (1.45% employer share) | $33 | $33 | $870 |
| Federal unemployment (FUTA) | $14 | $0 | $42 |
| Texas unemployment tax | $62 | $0 | $243 |
| Total employer taxes | $253 | $177 | $4,875 |
For a $250,000 earner in New York paid monthly, Social Security stops partway through the year, and the yearly total is $15,828, or 6.331% of pay.
Assumptions and limitations
- Equal paychecks from January 1. Bonuses, raises or a mid-year start change when wage bases are reached, but not the yearly total for the same yearly pay (unless the employee also worked for another employer, which does not count toward your wage bases).
- Gross pay is fully taxable. Pre-tax Section 125 deductions such as health premiums are exempt from Social Security, Medicare and FUTA, so taxes would be slightly lower. Employee 401(k) deferrals are still taxed.
- State rate. The default is the new-employer rate; where only the U.S. Department of Labor's base rate is shown, state surcharges may be extra. States that set new-employer rates by industry, and any state we could not confirm, need your rate.
- Not included: state disability, paid family leave, workers' compensation and local payroll taxes paid by the employer, and the employee's own withholding (see the paycheck calculator).
- FUTA credit reductions for 2026 are preliminary until the Department of Labor announces them on November 10, 2026. The FUTA tax calculator lets you try other rates.