Employers and employees pay four federal payroll taxes when they work in the United States. Each tax has a different W-2 rate that you need to know for your business. They are:
Social Security Tax – The total Social Security tax is 12.4%. Employers contribute to half of the tax by paying 6.2%.
Medicare Tax – The total Medicare tax is 2.9%. Employers pay half of the tax — or 1.45%.
Unemployment Tax – Employers pay a 6% tax on an employee’s first earned $7,000.
Income Tax – Employers pay part of an employee’s income tax. The total amount varies based on the employee’s wages.
The total federal payroll tax rate is roughly 15.3% before you factor in additional taxes on your business. Employers cover half of the FICA tax. Do not contribute to the tax rate if you hire any 1099 independent contractors. They pay the full 15.3% as their self-employment tax.
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