When you hire someone in the United States, the salary you agree to pay is not the same as the cost of employing them. On top of every dollar of wages, federal and state laws require you to pay a stack of employer-side payroll taxes — Social Security, Medicare, FUTA (federal unemployment), and SUTA (state unemployment). This payroll tax calculator adds those employer costs to any annual wage figure so you can see the true, fully-loaded cost of a position before you make an offer.
Enter an annual gross wage and your state unemployment rate, and the result card breaks out each tax line, the total employer payroll tax, the effective burden as a percentage of wages, and the total cost of labor — the number your bank account actually feels each year.
How to Use
- Enter the Annual Gross Wages — the taxable cash salary (or wages) you plan to pay the employee. This is the number on the offer letter, before you withhold anything.
- Set the SUTA Rate (New-Employer). If you are a new employer, your state assigns a standard new-employer rate, commonly around 2.7%–3.5% until your experience rating is established. Use your actual rate from your state workforce agency if you already have one.
- Adjust the SUTA / FUTA Wage Base only if your state differs from the federal default. Most states use $7,000 per employee per year, which is also the FUTA base, so the default works for most employers.
- Read the result card from top to bottom: the four tax lines, then the Total Employer Payroll Tax (highlighted), the Effective Employer Tax Burden as a percent, and finally the Total Cost of Labor — wages plus every employer tax.
A useful way to think about the result: the highlighted total employer payroll tax is money you must send to the government in addition to the paychecks, and the cost-of-labor figure is what budgeting software and cash-flow plans should actually use.
The Employer Payroll Tax Formula
Unlike the worker's share, which comes out of their paycheck, employer payroll taxes are a cost the employer pays on top of wages. The 2024 rates from IRS Publication 15 (Circular E) are:
- Social Security — 6.2% of wages, but only up to the annual Social Security wage base of $168,600. Pay someone more than that and the employer Social Security tax stops capping out.
- Medicare — 1.45% of every dollar of wages, with no upper cap. It keeps applying no matter how high the salary climbs.
- FUTA — 0.6% (the net federal rate after the standard 5.4% SUTA credit) on the first $7,000 of each employee's wages. This funds federal unemployment administration.
- SUTA — your state rate (the default 3.0% here) on the first wage-base amount, commonly $7,000, funding state unemployment benefits.
Combined, the employer tax burden sits at roughly 7–8% of wages for ordinary salaries, but it compresses sharply once you exceed the Social Security and unemployment caps.
Examples
Example 1 — A $100,000 salaried hire. Wages are $100,000, SUTA rate 3.0%, wage base $7,000. Employer Social Security is $6,200; Medicare is $1,450; FUTA is $42.00 (0.6% of $7,000); SUTA is $210.00 (3.0% of $7,000). Total employer payroll tax is $7,902, an effective burden of 7.90%, bringing the true cost of labor to $107,902. Budgeting for $100,000 instead of $107,902 would understate this hire by nearly $8,000 in year one.
Example 2 — A $200,000 executive. At $200,000, wages exceed the $168,600 Social Security wage base, so employer Social Security caps at $10,453.20. Medicare keeps running on the full $200,000 — $2,900. FUTA and SUTA are unchanged at $42 and $210 because both stop at $7,000. Total employer payroll tax is $13,605.20, but the effective burden falls to 6.80% — the caps are why higher earners cost less as a percentage of salary.
Example 3 — A $1,000,000 key employee. Social Security is capped at $10,453.20; Medicare on a million dollars is $14,500; FUTA and SUTA remain at $42 and $210. Total employer payroll tax is $25,205.20, an effective burden of only 2.52%, and total cost of labor reaches $1,025,205.20. The Medicare line dominates — it is the one employer tax that never runs out.
FAQ
What payroll taxes does an employer pay?
An employer pays four main taxes on top of wages: 6.2% Social Security (up to the annual wage base), 1.45% Medicare on all wages, 0.6% FUTA on the first $7,000 of each employee, and state unemployment (SUTA) at your assigned rate on your state's wage base. Together these usually add about 7–8% to a typical salary.
What is the difference between FUTA and SUTA?
FUTA is the federal unemployment tax, a flat 0.6% on the first $7,000 of wages, collected to run federal unemployment programs. SUTA is the state unemployment tax, with a rate your state assigns based on your industry and history, paid on a state wage base (often $7,000). Paying SUTA on time is what qualifies you for the FUTA credit that keeps the federal rate at 0.6% instead of 6.0%.
Why does the effective tax burden drop on higher salaries?
Because two of the four taxes have caps. Social Security stops after $168,600 of wages, and both FUTA and SUTA stop after their wage base (typically $7,000). Only Medicare (1.45%) keeps applying to every dollar. So as wages climb past the caps, the fixed tax amount is spread over a larger salary, and the percentage burden falls — down to about 2.5% at very high pay.
Does the employer pay Social Security and Medicare too?
Yes. Social Security and Medicare are split equally between worker and employer: each side pays 6.2% Social Security and 1.45% Medicare. The employee's half is withheld from their paycheck; this calculator estimates only the employer's half, which is a separate cost you must remit.
What is the SUTA new-employer rate?
New businesses that have not built an unemployment experience history are assigned a standard new-employer rate set by their state. It is commonly around 2.7% to 3.5% on the state wage base for the first two to three years, after which your experience rating (how many former workers claim benefits) moves your rate up or down. Use your actual state notice if you have one.
Are benefits, bonuses, or contractor payments included?
This calculator covers taxable cash wages only. Bonuses are generally taxable wages and should be included, but health insurance premiums you pay as an employer are usually exempt from FICA, and payments to independent contractors are not wages at all — they are reported on Form 1099-NEC with no employer payroll tax withheld. Model those separately.
Disclaimer
This payroll tax calculator is provided for informational purposes only and does not constitute legal, tax, payroll, or accounting advice. Figures use federal 2024 rates and a default $7,000 unemployment wage base; actual FUTA credit, SUTA rates, SUTA wage bases, and the Social Security wage base vary by state and year and may include credit-reduction surcharges. Always confirm your obligations with a licensed tax professional or a certified payroll provider before remitting any tax.