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Rise Glossary

What are Employer Payroll Taxes?

Employer payroll taxes are taxes that employers are required to pay on behalf of their employees. These taxes typically include:

Social Security and Medicare taxes: Also known as FICA (Federal Insurance Contributions Act) taxes, these are taxes that fund the Social Security and Medicare programs. The current combined Social Security and Medicare tax rate for employers is 7.65%, which includes a 6.2% Social Security tax and a 1.45% Medicare tax. Employers are required to match the amount of these taxes that employees pay, up to a certain wage limit.

Federal Unemployment Tax Act (FUTA): This is a federal tax that funds unemployment compensation programs. The current FUTA tax rate is 6% on the first $7,000 of an employee's wages, but employers may be eligible for a credit of up to 5.4% if they have paid state unemployment taxes on time.

State Unemployment Tax Act (SUTA): Each state has its own unemployment tax program and rate, which funds state unemployment compensation programs. Employers are required to pay these taxes based on the wages they pay to employees.

State and local taxes: Depending on the state and municipality, employers may also be required to pay state and local taxes, such as withholding taxes, sales taxes, and property taxes.

It is important to note that Employers are also responsible for reporting and remitting these taxes to the appropriate government agencies, such as the Internal Revenue Service (IRS) and state tax departments.