The HR Dictionary

Payroll Tax Rates

The percentage of an employee's wages that an employer must deduct and provide to the proper taxing authorities are known as payroll tax rates. Government services and programs like Social Security, Medicare, and unemployment compensation are paid for with the help of these levies. 

Payroll tax rates can vary depending on a variety of factors, including the employee's income, the type of tax, and the location of the employer.

Payroll Tax Rates in the US

  • Social Security tax rate: 6.2% for employees and 6.2% for employers on the first $142,800 of an employee's annual income.
  • Medicare tax rate: 1.45% for employees and 1.45% for employers on all of an employee's income. Additionally, there is an additional 0.9% Medicare surtax on employees with income above certain thresholds.

In addition to these federal payroll taxes, some states and localities also impose their own payroll taxes, which can vary in rate and type.