United States Payroll Taxes by State

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Get State-By-State Payroll Tax Information

Each year, businesses pay more in payroll taxes than income taxes. To learn how they affect your business, click on a state to get a comprehensive overview of the key payroll regulations — including a detailed breakdown of your responsibilities for federal, state and local payroll taxes.

Alabama Payroll Taxes

11 Steps to Compliance in the Dixie State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $2.13 $5.12 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Alabama is one of three states with no specific regulations on how often workers should be paid.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

Birmingham has a 1% local income tax.


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 5%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes 0.06% employment security)
$8,000 None 0.65 - 6.8%
New employer rate Voluntary contribution
2.7% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with over 5 employees.

Coverage can be acquired from:

  • An approved workers' compensation carrier.

  • An assigned risk pool.

  • A group self-insurance fund.

  • Individual self-insurance.

  • An approved alternative workers' compensation policy from an authorized insurance carrier.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Alabama Department of Revenue

State unemployment tax (SUTA)

Alabama Department of Labor


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 7 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Alabama Department of Labor

State minimum wage, overtime and workers’ compensation.

Alabama Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Alaska Payroll Taxes

11 Steps to Compliance in the Last Frontier State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$9.80 $9.80 N/A $4.25

Overtime Legislation

Federal standard (FLSA) + state legislation Threshold for salaried workers to qualify for overtime

Time and half after 40 hours weekly or after 8 hours daily.

Less than $455 per week or $23,660 a year.

Note: Employers with less than 4 employees are not subject to Alaska’s overtime rules.

Payroll Frequency

Employers and employees may agree on weekly, bi-weekly, semi-monthly or monthly. Otherwise, the employee gets to choose from the defaults of semi-monthly or monthly.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

None

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding N/A

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$39,800 0.50% 1.0 - 5.4%
New employer rate Voluntary contribution
1.01 - 1.73% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Taxes Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Alaska Department of Revenue

State unemployment tax (SUTA)

Alaska Department of Labor and Workforce Development


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

All Alaskan employers are now required to report every new hire and rehire to the Child Support Services Division (CSSD) within 20 days of hire.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Alaska Department of Labor and Workforce Development

State minimum wage, overtime and workers’ compensation.

Alaska Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Arizona Payroll Taxes

11 Steps to Compliance in the Grand Canyon State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$10.00 $7.00 $3.00 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Hourly employees must be provided two or more paydays per month — no more than 16 days apart. This means no monthly payroll for hourly workers in Arizona.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding None

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$7,000 None 0.04 - 10.59%
New employer rate Voluntary Contribution
2.0% Yes

Note: As of 2017 there is no longer a job training tax surcharge in Arizona.


Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required if you have more than three employees. (Excluding domestic servants, working partners and sole proprietors.)

Can be acquired through a licensed company or the business can apply to be self-insured.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Taxes Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Arizona Department of Revenue

State unemployment tax (SUTA)

Arizona Department of Economic Security


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Must be reported within 20 days of hiring.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Industrial Commission of Arizona (Labor Department)

State minimum wage, overtime and workers’ compensation.

Arizona Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Arkansas Payroll Taxes

11 Steps to Compliance in the Nature State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$8.50

(for employers of 4 or more employees)

$2.63 $5.87 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Hourly workers must be paid weekly, bi-weekly, semi-monthly or monthly.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 6.9%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$12,000 None 0.04 - 14.3%
New employer rate Voluntary contribution
3.2% Yes

Note: Rates above include a .3% stabilization tax.


Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required if you have more than three employees. (Excluding domestic servants, working partners and sole proprietors.)

Can be acquired through a licensed company or the business can apply to be self-insured.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Taxes Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Arkansas Department of Finance and Administration

State unemployment tax (SUTA)

Arkansas Department of Workforce Services


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Must be reported within 20 days of hiring.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Arkansas Department of Labor

State minimum wage, overtime and workers’ compensation.

Arkansas Department of Finance and Administration

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

California Payroll Taxes

11 Steps to Compliance in the Golden State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$10.00

(25 or fewer employees)

$10.50

(26 or more employees)

$10.00

(25 or fewer employees)

$10.50

(26 or more employees)

N/A $4.25
California cities with their own minimum wage laws
  • Berkeley

  • Emeryville

  • Los Angeles

  • Mountain View

  • Oakland

  • Palo Alto

  • Richmond

  • Sacramento

  • San Francisco

  • San Jose

  • Santa Clara

Overtime Legislation

Federal standard (FLSA) + state legislation Threshold for salaried workers to qualify for overtime

Time and half after 40 hours weekly or after 8 hours daily.

Double overtime applies after 12 hours daily or 8 hours on the 7th day of work.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Wages earned between the 1st and 15th days of the month must be paid no later than the 26th day of the month during which the labor was performed. Wages earned between the 16th and last day of the month must be paid by the 10th day of the following month.

Weekly, bi-weekly and semi-monthly pay schedules that fall on dates other than between the 1st and 15th, and 16th and last day of the month, must be paid within 7 calendar days of the end of the payroll period within which the wages were earned.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 35%
State
Flat Rate Witholding 6.6%

on wages

10.23%

on bonuses and earnings from stock

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA) (Paid in full to the IRS by the employer)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA) (Paid in full to the state by the employer)

Max. taxable earnings Employee deduction Rate (includes 0.06% employment security)
$7,000 None 1.5 - 6.2%
New employer rate Employee training tax (ETT) Voluntary Contribution
3.4% 0.10% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

State Disability Insurance (employee-paid)

Withholding amount

0.9%


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

California Tax Service Center

State unemployment tax (SUTA), disability and ETT.

Employment Development Department


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Employment Development Department

State minimum wage, overtime and workers’ compensation.

California Tax Service Center

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Colorado Payroll Taxes

11 Steps to Compliance in the Rocky Mountain State

You have a business and you have employees. They work for you, you pay them. Sounds simple enough, right? Don’t let all that clean mountain air fool you. As it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$9.30 $6.28 $3.02 $4.25

Overtime Legislation

Federal standard (FLSA) + state legislation Threshold for salaried workers to qualify for overtime

Time and half after 40 hours weekly or after 12 hours daily.

Less than $455 per week or $23,660 a year.

Payroll Frequency

If a frequency hasn’t been chosen by the employer and employees, the employee must be paid at least every 30 days.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

These cities claim a flat occupational tax based on income thresholds:


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 4.63%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$12,500 None 0.77 - 10.10%
New employer rate Voluntary contribution
2.11% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with 1 or more employees.

Can be acquired through a commercial carrier or self-funding.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Colorado Business Express

State unemployment tax (SUTA)


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Colorado Department of Labor and Employment

State minimum wage, overtime and workers’ compensation.

Colorado Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Connecticut Payroll Taxes

11 Steps to Compliance in the Constitution State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$10.10 $6.38

Hotel & restaurant employees

$8.23

Bartenders

$9.75

Other tipped employees

$3.72

Hotel & restaurant employees

$1.87

Bartenders

$0.35

Other tipped employees

$4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $475 per week or $24,700 a year.

Payroll Frequency

Hourly workers must be paid weekly unless the employer and employee agree upon bi-weekly or semi-monthly. Monthly payroll requires the approval of the labor commissioner.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding No provision.

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
(includes 1.4% solvency surtax)
$15,000 None 1.9 - 6.8%
New employer rate Voluntary contribution
3.9% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with 1 or more employees.

Can be acquired through a commercial provider or self-funded.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Connecticut Department of Revenue Services

State unemployment tax (SUTA)

Connecticut Department of Labor


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Connecticut Department of Labor

State minimum wage, overtime and workers’ compensation.

Connecticut Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Delaware Payroll Taxes

11 Steps to Compliance in the First State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$8.25 $2.23 $6.02 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

The longest interval permitted is monthly and wages must be paid within 7 days of the close of a pay period.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

Wilmington has a flat 1.25% income tax.


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding No provision

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes 0.02% supplemental assessment rate)
$18,500 None 0.3 - 8.2%
New employer rate Voluntary contribution
1.7% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with 1 or more employees.

Can be purchased through a commercial carrier.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Delaware Department of Finance/Division of Revenue

State unemployment tax (SUTA)

Delaware Department of Labour/Division of Unemployment Insurance | Form UC- 1 (Report to Determine Liability)


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Delaware Department of Labor/Division of Industrial Affairs

State minimum wage, overtime and workers’ compensation.

Delaware Department of Finance/Division of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

District of Columbia Payroll Taxes

11 Steps to Compliance in the Nation’s Capital

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage $11.50

until June 30, 2017

$12.50

July 1, 2017

$13.25

July 1, 2018

$14.00

July 1, 2019

$15.00

July 1, 2020

Min. Cash Wage (Tipped Employees) $2.77 $3.33 $3.89 $4.45 $5.00
Maximum Tip Credit $8.73 $9.17 $9.36 $9.55 $10.00
Youth Minimum Wage $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Minimum twice a month — bi-weekly or semi-monthly — unless other labor negotiations or agreements have taken place. Under the new minimum wage law, employers with tipped employees must also certify every quarter that they are meeting the guidelines.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

District

See withholding tables.

Local

N/A

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

The District of Columbia has agreements with every state.

More Information

Exemption Form


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding No provision

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
(+2% funding assessment)
$9,000 None 1.6 - 7.0%
New employer rate
(+2% funding assessment)
Voluntary contribution
2.7% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with more than 1 employee.

Can be acquired through a commercial provider or self-insurance.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

District of Columbia Office of Tax and Revenue | MyTax.DC.gov

State unemployment tax (SUTA)

District of Columbia Department of Employment Services


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

District of Columbia Department of Employment Services

State minimum wage, overtime and workers’ compensation.

District of Columbia Office of Tax and Revenue | MyTax.DC.gov

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Florida Payroll Taxes

11 Steps to Compliance in the Sunshine State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$8.10 $5.08 $3.02 $4.25
Local minimum wage

Miami Beach was trying to set its own minimum wage, but this has been struck down.

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Florida is one of three states with no specific regulations on how often workers should be paid.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

None

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding None

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$7,000 None 0.1 - 5.4%
New employer rate Voluntary contribution
2.7% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for:

  • Construction businesses with 1 or more employees

  • Non-construction businesses with 4 or more employees

  • Agricultural businesses and farms with 6 or more permanent employees (or 12 or more seasonal workers)

Coverage can be commercial or self-insured.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Florida Department of Revenue | Floridarevenue.com

State unemployment tax (SUTA)

Florida Department of Revenue (Reemployment Tax)


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

MyFlorida.com | Department of Economic Opportunity

State minimum wage, overtime and workers’ compensation.

Florida Department of Revenue | Floridarevenue.com

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Georgia Payroll Taxes

11 Steps to Compliance in the Peach State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $2.13 $5.12 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Semi-monthly, bi-weekly or weekly.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding

Percentage varies based on annual wages.

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes 0.06% employment security)
$9,500 None 0.04 - 8.1%
New employer rate
(includes 0.06% employment security)
Voluntary contribution
2.7% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Georgia Department of Revenue

State unemployment tax (SUTA)

Georgia Department of Labor


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 10 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Georgia Department of Labor | State Board of Workers Compensation

State minimum wage, overtime and workers’ compensation.

Georgia Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Hawaii Payroll Taxes

11 Steps to Compliance in the Aloha State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage $9.25

Jan. 1, 2017

$10.10

Jan. 1, 2018

Min. Cash Wage (Tipped Employees) $8.50 $9.35
Maximum Tip Credit $0.75 $0.75
Youth Minimum Wage $4.25 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Weekly, bi-weekly and semi-monthly. Monthly only upon special election.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding No provision

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$44,000 None 0.0 - 5.6%
New employer rate Voluntary contribution
2.4% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with one or more employees.

Must be purchased from an approved carrier.

Disability Insurance

Employer deduction

Cannot exceed 0.5% of the employee’s weekly wages, nor the maximum weekly deduction

Employer contribution

Employers may either choose to pay all the costs or cover the balance after the employee contribution.


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Department of Taxation

State unemployment tax (SUTA)

Department of Labor and Industrial Relations


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Department of Labor and Industrial Relations

State minimum wage, overtime and workers’ compensation.

Department of Taxation

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Idaho Payroll Taxes

11 Steps to Compliance in the Gem State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $3.35 $3.90 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Weekly, bi-weekly, semi-monthly and monthly are all valid options.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 7.4%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes a workforce training fund surtax)
$37,800 None 0.399 - 5.4%
New employer rate
(includes a workforce training fund surtax)
1.395%
Voluntary contribution None
1.395% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Idaho State Tax Commission

State unemployment tax (SUTA)

Idaho Department of Labor


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Idaho Department of Labor

State minimum wage, overtime and workers’ compensation.

Idaho State Tax Commission

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Illinois Payroll Taxes

11 Steps to Compliance in the Land of Lincoln

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$8.25 $4.95 $3.30 $4.25
Chicago minimum wage
$10.50 $11.00

July 1, 2017

$12.00

July 1, 2018

$13.00

July 1, 2019

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

A minimum of semi-monthly and no later than 13 days after the close of the previous pay period.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

Illinois has agreements with Iowa, Kentucky, Michigan and Wisconsin.

More Information

Exemption Form


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 3.75%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes 0.55% fund-building surtax)
$12,960 None 0.55 - 7.35%
New employer rate
(includes 0.55% fund-building surtax)
Voluntary contribution
3.45% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with 1 or more employees.

Can be purchased through any private sector provider.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Illinois Revenue

State unemployment tax (SUTA)

Illinois Department of Employment Security


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Illinois Department of Labor

State minimum wage, overtime and workers’ compensation.

Illinois Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Indiana Payroll Taxes

11 Steps to Compliance in the Hoosier State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $2.13 $5.12 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

At least bi-weekly or semi-monthly.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

See county agencies.

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

Indiana has agreements with Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin.

More Information

Exemption Form


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 3.23%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$9,500 None 0.5 - 7.4%
New employer rate Voluntary contribution
1.6%, 2.5% or 3.23% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Indiana Department of Revenue

State unemployment tax (SUTA)

Indiana Department of Workforce Development


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Indiana Department of Labor

State minimum wage, overtime and workers’ compensation.

Indiana Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Iowa Payroll Taxes

11 Steps to Compliance in the Hawkeye State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25

(Employers that gross more than $300,000 and those classified as “named enterprises” must comply.)

$4.35 $2.90 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Weekly, bi-weekly, semi-monthly and monthly.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

Iowa has an agreement with residents of Illinois.

More Information

Exemption Form


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 6%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$29,300 None 0.0 - 8.0%
New employer rate Voluntary contribution
1.0% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Iowa Department of Revenue

State unemployment tax (SUTA)

Iowa Workforce Development


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 15 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Iowa Workforce Development

State minimum wage, overtime and workers’ compensation.

Iowa Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Kansas Payroll Taxes

11 Steps to Compliance in the Sunflower State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $2.13 $5.12 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours. (46 hours for workers not covered by FLSA)

Less than $455 per week or $23,660 a year.

Payroll Frequency

Minimum frequency is monthly.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 4.5%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$14,000 None 0.20 - 7.60%
New employer rate Voluntary contribution
2.7% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with a gross payroll of $20,000+ (Excluding certain agricultural businesses)

Can be acquired through a third-party or employers can apply to be self-insured.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Kansas Department of Revenue

State unemployment tax (SUTA)

Kansas Department of Labor


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Kansas Department of Labor

State minimum wage, overtime and workers’ compensation.

Kansas Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Kentucky Payroll Taxes

11 Steps to Compliance in the Bluegrass State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $2.13 $5.12 $4.25
Local Minimum Wage

The Kentucky Supreme Court struck down the minimum wage laws in Lexington and Louisville.

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

At least semi-monthly — meaning weekly and bi-weekly are also accepted.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

Kentucky has agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin.

More Information

Exemption Form


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding No provision

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$10,200 None 0.6 - 9.75%
New employer rate Voluntary contribution
2.7% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with 1 or more employees.

Can be acquired from private insurers or self-insurance groups.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Kentucky Department of Revenue

State unemployment tax (SUTA)

Office of Employment & Training


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Labor Cabinet of Kentucky

State minimum wage, overtime and workers’ compensation.

Kentucky Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Louisiana Payroll Taxes

11 Steps to Compliance in the Pelican State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $2.13 $5.12 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Bi-weekly or semi-monthly. (Applicable to entities employing 10 or more employees that are engaged in manufacturing, mining, or boring for oil, and to every public service corporation.)


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding No provision

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes social charge assessments)
$7,700 None 0.1 - 6.2%
New employer rate Voluntary contribution
1.23 - 3.07% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Louisiana Department of Revenue

State unemployment tax (SUTA)

Louisiana Workforce Commission


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Louisiana Workforce Commission

State minimum wage, overtime and workers’ compensation.

Louisiana Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Maine Payroll Taxes

11 Steps to Compliance in Vacationland

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage $9.00 $10.00

Jan 1, 2018

$11.00

Jan 1, 2019

$12.00

Jan 1, 2020

Min. Cash Wage (Tipped Employees) $5.00 $6.00 $7.00 $8.00
Maximum Tip Credit $4.00 $4.00 $4.00 $4.00
Youth Minimum Wage $4.25 $4.25 $4.25 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $519.24 per week/$27,000 a year.

Payroll Frequency

At regular intervals not to exceed 16 days — each payment must include wages earned within 8 days of the payment date.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 5%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes 0.06% competitive skills scholarship fund rate)
$12,000 None 0.55 - 5.46%
New employer rate (includes 0.06% competitive skills scholarship fund rate) Voluntary contribution
1.83% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with 1 or more employees.

Can be acquired through private insurance companies or self-insurance.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Department of Administration and Financial Services

State unemployment tax (SUTA)

Maine Department of Labor


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 7 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Maine Department of Labor

State minimum wage, overtime and workers’ compensation.

Department of Administration and Financial Services

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Maryland Payroll Taxes

11 Steps to Compliance in the Old Line State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage $8.75 $9.25

July 1, 2017

$10.10

July 1, 2018

Min. Cash Wage (Tipped Employees) $3.63 $3.63 $3.63
Maximum Tip Credit $5.12 $5.62 $6.47
Youth Minimum Wage $4.25 $4.25 $4.25
Montgomery and Prince George’s County $10.75 $11.50

July 1, 2017 Montgomery County

$11.50

Oct. 1, 2017 Prince George’s County

 

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

At least once every two weeks (bi-weekly) or twice in a month (semi-monthly).


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

Each county — see tables.

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

Maryland has agreements with the District of Columbia, Pennsylvania, Virginia and West Virginia.

More Information

Exemption Form


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 5.75%

state rate + county rates

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate
$8,500 None 0.3 - 7.5%
New employer rate Voluntary contribution
2.6% None

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Comptroller of Maryland

State unemployment tax (SUTA)

Department of Labor, Licensing and Regulation


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Department of Labor, Licensing and Regulation

State minimum wage, overtime and workers’ compensation.

Comptroller of Maryland

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Massachusetts Payroll Taxes

11 Steps to Compliance in the Bay State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$11.00 $3.75 $7.25 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Blue Laws require time and half for certain retail and nonretail businesses on Sundays.

Less than $455 per week or $23,660 a year.

Payroll Frequency

At least weekly or bi-weekly and within 6 days of the previous pay period in which the wages were earned.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 5.1%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (includes 0.73% solvency assessment and 0.056% workforce training fund surcharges)
$15,000 None 0.73 - 11.13%
New employer rate (includes 0.73% solvency assessment and 0.056% workforce training fund surcharges) Medical assistance contribution (employer) (0.12% 4th year; 0.24% 5th year and 0.34% 6th year)
1.87% 0.12 - 0.34%
Workforce training fund (employer) Voluntary contribution
0.056% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Required for employers with 1 or more employees. (Domestic service employees must work a minimum of 16 hours per week in order to require coverage.)

Can be purchased from a licensed provider.

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

MassTaxConnect

State unemployment tax (SUTA)

Executive Office of Labor and Workforce Development


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 14 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Executive Office of Labor and Workforce Development (EOLWD)

State minimum wage, overtime and workers’ compensation.

Massachusetts Department of Revenue (DOR)

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Michigan Payroll Taxes

11 Steps to Compliance in the Great Lake State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage $8.90 $9.25

Jan 1, 2018

Min. Cash Wage (Tipped Employees) $3.38 $3.52
Maximum Tip Credit $5.52 $5.73
Youth Training Minimum Wage $4.25 $4.25
Youth Minimum Wage (ages 16-17) $7.57 $7.86

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Weekly, bi-weekly, semi-monthly and monthly all allowed.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

See withholding tables.

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

Michigan has agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin.

More Information

Employees must present a statement of nonresidence.


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 4.25%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (plus bond obligation assessment)
$9,000

($9,500 for delinquent employees)

None 0.06 - 10.3%
New employer rate (plus ¼ chargeable benefits component) Voluntary contribution
2.7% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Michigan Department of Treasury

State unemployment tax (SUTA)

Unemployment Insurance Agency


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Department of Licensing and Regulatory Affairs | Workers’ Compensation Agency

State minimum wage, overtime and workers’ compensation.

Department of Treasury

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Minnesota Payroll Taxes

11 Steps to Compliance in the North Star State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.75

Small employer <500,000 in gross annual revenue

$9.50

Large employer >500,000 in gross annual revenue

Increases tied to the cost of living are set to begin in Jan. 2018.

N/A N/A $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours.

Less than $455 per week or $23,660 a year.

Payroll Frequency

At least once a month (every 31 days).


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None

Reciprocal Agreements

An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency.

Minnesota has agreements with Michigan or North Dakota.

More Information

Exemption Forms


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding 6.25%

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4% Max. taxable earnings $127,200

Step 5

Report and Pay Federal and State Unemployment Taxes

Federal unemployment tax (FUTA) is 100% employer-paid. The rules for state unemployment tax (SUTA) vary by state, with some states requiring the employer to cover all the costs and others requiring employee contributions as well.

Federal Unemployment Tax (FUTA)

Max. taxable earnings % taxable wages Maximum credit Normal net tax
$7,000 6.0% 5.4% 0.6%*

*Employers can claim up to 5.4% credit for FUTA, as long as all of the SUTA taxes were paid on time. This deduction reduces the net rate for FUTA to 0.6%.

State Unemployment Tax (SUTA)

Max. taxable earnings Employee deduction Rate (plus 0.1% workforce development assessment surcharge)
$32,000 None 0.1 - 9.0%
New employer rate (plus 0.1% workforce development assessment surcharge) Voluntary contribution
1.44% Yes

Step 6

Comply With Workers’ Compensation and Disability Insurance Rules

Employers must also follow each state’s coverage requirements for workers’ compensation and disability insurance. (Federal workers’ compensation is a federal program that only applies to specific groups of federal government workers.)

Workers’ Compensation

Disability Insurance

Employer responsibility

None


Step 7

Register for Your Business Tax Identification Numbers

Businesses must have specific identification (ID) numbers for making payments to the appropriate tax authorities. You will need these numbers for running payroll, as well as for any other interactions you have with these agencies. (Note: Some states will not accept temporary ID numbers. Verify with your state and ensure you have a valid ID before running payroll.)

How to Get Your Business Tax IDs

Tax Agency/Department

Federal income tax, Medicare, social security (FICA) and federal unemployment tax (FUTA)

IRS Employer Identification Number (EIN)

State income and other business taxes

Department of Revenue

State unemployment tax (SUTA)

Unemployment Insurance Minnesota


Step 8

Meet Your Reporting Requirements

In addition to paying and withholding taxes, employers are also subject to specific reporting requirements.

Reporting Requirements

Type of report Deadline

New hire reporting.

Within 20 days of hiring or rehiring date.

Form 941 (Federal income tax, Medicare, social security and tipped wages)

Quarterly.

Form 940 (FUTA)

Annually — January 31

Wage detail reports (state income taxes, unemployment and other requirements)

Quarterly.

Year-end W-2s.

Must be sent to employees and filed with the SSA by January 31.


Step 9

Know Where to Look for More Information

While the information on this page hits the highlights, for more details you can check out any of the websites below.

Helpful Websites

Resource Topics

Internal Revenue Service (IRS) Small Business and Self-Employed Tax Centre

Federal income taxes, Medicare, social security and federal unemployment.

Social Security Administration (SSA)

Social security number verification and year-end W-2 reporting.

U.S. Department of Labor (DOL)

Federal minimum wage, overtime and workers’ compensation.

Department of Labor and Industry

State minimum wage, overtime and workers’ compensation.

Department of Revenue

State income tax and employer taxes.

Wagepoint Blog

Helpful articles on payroll and a range of small business topics.


Step 10

Know Why Getting Your Payroll Taxes Right Really Matters

It’s the law and the IRS is fond of enforcing it.

  • If you purposefully side-step your responsibilities, you could be subject to a number of fines and penalties.

  • The withholding and deduction amounts are reported in each employee’s W-2, which must be sent to the employee and the Social Security Administration (SSA) by January 31 each year.

  • If you don’t withhold the proper amounts of income tax, your employees may face large tax payments on their personal income taxes. (It’s not a great confidence builder either.)

  • Failing to contribute to programs, like Medicare or social security, also means that employees will qualify for lower levels of benefits or possibly none at all.


Step 11

Automate Your Payroll Compliance

Small business payroll software, like Wagepoint, saves you time and money by automating payroll tax calculations and reporting in order to improve compliance and reduce the risk of costly mistakes. Learn more by contacting us or signing up for a commitment-free 30-day trial with no need to provide your credit card information.

Mississippi Payroll Taxes

11 Steps to Compliance in the Magnolia State

You have a business and you have employees. They work for you, you pay them. It sounds simple enough. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll.

Payroll compliance (getting your payroll right) means obeying all these rules at a federal, state and local level. The following steps will help you understand how certain laws and payroll taxes (employment taxes) affect your payroll and your responsibilities as an employer.


Step 1

Follow Wage and Labor Laws

The federal minimum wage and overtime rules were established by the Fair Labor Standards Act (FLSA). If a state has its own laws, in most cases, workers are entitled to the higher rate or standard.

Wage and labor laws affect how gross pay is calculated. In turn, the gross pay amount is used to calculate income and payroll taxes. Gross pay minus these deductions equals net pay.

Minimum Wage Requirements

Minimum Wage Min. Cash Wage (Tipped Employees) Maximum Tip Credit Youth Minimum Wage
$7.25 $2.13 $5.12 $4.25

Overtime Legislation

Federal standard (FLSA) Threshold for salaried workers to qualify for overtime

Time and half after 40 hours a week.

Less than $455 per week or $23,660 a year.

Payroll Frequency

Mississippi requires at least a bi-weekly or semi-monthly pay frequency.


Step 2

Withhold the Proper Income Tax Amounts

Income tax in the United States has been structured as a pay-as-you-go tax. Employers are responsible for withholding (deducting) the proper amount of federal, state and local tax from each employee’s paycheck during each pay cycle.

Income Tax Requirements

Level Income Tax Requirements

Federal

See withholding tables.

State

See withholding tables.

Local

None


Step 3

Calculate Tax on Bonus Wages and Account for Qualified Deductions

In addition to standard wages, bonuses, commissions, overtime pay, back pay, accumulated sick pay are considered bonus wages (supplemental wages), or essentially taxable income that must be handled properly during the payroll process.

Income Tax on Bonus Wages (Effective 2017)

Federal
Flat Rate Witholding 25% Pay Over $1 Million 39.6%
State
Flat Rate Witholding No provision

Conversely, contributions to health savings accounts and retirement accounts (401Ks) are tax deductible, up to certain set amounts. The federal standards below apply in every state, district and territory.

Tax-Deductible Contribution Limits (Effective 2017)

Health Savings Accounts
Self-only (Employee + Employer) $3,400 Family (Employee + Employer) $6,750
Catch-up (Employee + Employer) $1,000
Retirement Plans
Limit $18,000 Catch-up $6,000

Step 4

Withhold and Contribute FICA Taxes

Medicare and social security are part of the Federal Insurance Contribution Act (FICA). FICA taxes are split evenly in terms of employee withholding and employer contributions amounts. However, the employer is responsible for processing both amounts with each payroll.

Federal Insurance Contribution Act (FICA) Taxes

Medicare
Employee contribution rate 1.45%

Employees earning over $200,000 pay an additional 0.9%.

Employer contribution rate 1.45%

Employers do not have to make additional contributions for employees earning over $200,000.

Total contribution rate 2.9% Max. taxable earnings No Limit
Social Security
Employee contribution rate 6.2% Employer contribution rate 6.2%
Total contribution rate 12.4%<