Payroll Tax Calculator

Payroll Tax Components (US)

Payroll taxes fund Social Security and Medicare. Both the employer and the employee pay a share, and this calculator breaks down each portion.

The rates below are set in statute and have not changed in decades. The wage base cap is re-set every year by the Social Security Administration, which is why it is an input on this page rather than a number baked into the code. Look up the figure for the year you are calculating and enter it.

Employee’s share:

• Social Security: 6.2% of wages, up to the annual wage base cap
• Medicare: 1.45% on all wages, with no cap
• Additional Medicare: 0.9% on wages above $200,000 (this threshold is fixed in law and is not indexed, so it catches more people every year)

Employer’s share (matching):

• Social Security: 6.2%, up to the same wage base cap
• Medicare: 1.45% on all wages
• FUTA (Federal Unemployment Tax Act): 0.6% on the first $7,000 of wages, so it maxes out at $42 per employee per year

Total FICA rate: 15.3%, split 7.65% each between employer and employee. FICA stands for the Federal Insurance Contributions Act.

What each input means:

• Annual Gross Salary: total pay before any deductions.
• Social Security wage base: the annual cap above which no more Social Security tax is owed. It rises most years with average wage growth.
• View As: choose Employee to see what leaves your paycheck, or Employer to see what a hire actually costs.

When to use this calculator: Employees use it to understand their paycheck deductions. Employers use it to calculate the real cost of a new hire beyond just salary.

Practical example. An employee earns $60,000 a year, well below any recent wage base cap. The employee’s share is Social Security $3,720 (6.2%) plus Medicare $870 (1.45%), which is $4,590. The employer matches that $4,590 and adds $42 of FUTA, so hiring this person costs $64,632 before a single benefit is paid for.

That gap is the number most first-time employers miss. The salary you negotiate is roughly 92.9% of what the role costs you, and that is before health insurance, equipment, or state unemployment tax.

Common mistakes. Many people forget FICA is split, and only ever see their own half on a payslip. The self-employed pay both halves as self-employment tax, but not on the full amount: the tax applies to 92.35% of net earnings, and half of it is deductible against income tax. That detail is worth real money and is missed constantly.

The wage cap also makes payroll tax regressive at the top. Once wages pass the cap, the next dollar is taxed at 2.9% combined instead of 15.3%, so effective FICA rates peak in the middle of the income distribution rather than at the top.

State unemployment tax (SUTA) is a further employer cost that is not modelled here, since the rate depends on the state and on the employer’s own layoff history.