Alabama Payroll Taxes
11 Steps to Compliance in the Dixie StateYou 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.

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. |

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 |
|
State |
|
Local |
Birmingham has a 1% local income tax. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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
$132,900 (2019) $128,400 (2018) |

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 |

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:
|
Disability Insurance
Employer responsibility |
None |

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) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Alaska Payroll Taxes
11 Steps to Compliance in the Last Frontier StateYou 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.

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 |
$9.80 Until Dec. 31, 2017 |
$9.84 Jan 1, 2018 |
Min. Cash Wage (Tipped Employees) | $9.80 | 9.84 |
Maximum Tip Credit | N/A | N/A |
Youth Minimum Wage | $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. |

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 |
|
State |
None |
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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
Employer responsibility |
Commercial coverage required if you have more than one employee. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Arizona Payroll Taxes
11 Steps to Compliance in the Grand Canyon StateYou 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.

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 |
$10.00
Until Dec. 31, 2017 |
$10.50 Jan. 1, 2018 | $11.00 Jan. 1 2019 | $12.00 Jan. 1 2020 |
Min. Cash Wage (Tipped Employees) | $7.00 | $7.50 | $8.00 | $9.00 |
Maximum Tip Credit | $3.00 | $3.00 | $3.00 | $3.00 |
Youth Minimum Wage | $4.25 | |||
ARIZONA
CITIES AND COUNTIES
WITH THEIR OWN MINIMUM WAGE LAWS
|
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. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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. |

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 |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Arkansas Payroll Taxes
11 Steps to Compliance in the Nature StateYou 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.

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. |

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 |
|
State |
|
Local |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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. |

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 |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
California Payroll Taxes
11 Steps to Compliance in the Golden StateYou 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.

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
Businesses with 25 or fewer employees | ||||
Minimum Wage |
$10.00 Until Dec. 31, 2017 |
$10.50 Jan. 1, 2018 |
$11.00 Jan. 1, 2019 |
12.00 Jan. 1, 2020 |
Min. Cash Wage (Tipped Employees) | $10.00 | $10.50 | $11.00 | 12.00 |
Maximum Tip Credit | N/A | N/A | N/A | N/A |
Businesses with 26 or more employees | ||||
Minimum Wage |
$10.50 Until Dec. 31, 2017 |
$11.00 Jan. 1, 2018 |
$12.00 Jan. 1, 2019 |
13.00 Jan. 1, 2020 |
Min. Cash Wage (Tipped Employees) | $10.50 | $11.00 | $12.00 | 13.00 |
Maximum Tip Credit | N/A | N/A | N/A | N/A |
Youth Minimum Wage |
|
|||
California
cities and counties
with their own minimum wage laws
|
Overtime Legislation
Federal standard (FLSA) + state legislation | Threshold for salaried workers to qualify for overtime |
---|---|
Time and half after 40 hours. Applies after 12 hours daily or 8 hours on the 7th day of work |
California has a number of exemptions as outlined by their Department of Industrial Relations. |
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. |

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 |
|
State |
|
Local |
San Francisco residents and workers are subject to 1.5% local income tax. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 one employee. (Excluding domestic servants, working partners and sole proprietors.) |
State Disability Insurance (employee-paid)
Withholding amount |
0.9% |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA), disability and ETT. |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Colorado Payroll Taxes
11 Steps to Compliance in the Rocky Mountain StateYou 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.

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 |
$9.30 Until Dec. 31, 2017 |
$10.20 Jan. 1, 2018 |
$11.10 Jan. 1, 2019 |
$12.00 Jan. 1, 2020 |
Min. Cash Wage (Tipped Employees) | $6.28 | $7.18 | $8.08 | $8.98 |
Maximum Tip Credit | $3.02 | $3.02 | $3.02 | $3.02 |
Youth Minimum Wage | $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. |

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

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Connecticut Payroll Taxes
11 Steps to Compliance in the Constitution StateYou 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.

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 $8.23Bartenders $9.75Other tipped employees |
$3.72
Hotel & restaurant employees $1.87Bartenders $0.35Other 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. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Delaware Payroll Taxes
11 Steps to Compliance in the First StateYou 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.

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. |

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 |
|
State |
|
Local |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |
Delaware Department of Labour/Division of Unemployment Insurance | Form UC- 1 (Report to Determine Liability) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
District of Columbia Payroll Taxes
11 Steps to Compliance in the Nation’s CapitalYou 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.

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. |

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 |
|
District |
|
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. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 |

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) |
|
State income and other business taxes |
District of Columbia Office of Tax and Revenue | MyTax.DC.gov |
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Florida Payroll Taxes
11 Steps to Compliance in the Sunshine StateYou 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.

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 |
$8.10 Until Dec. 31, 2017 |
$8.25 Jan. 1, 2018 |
Min. Cash Wage (Tipped Employees) | $5.08 | $5.23 |
Maximum Tip Credit | $3.02 | $3.02 |
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
Florida is one of three states with no specific regulations on how often workers should be paid. |

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 |
|
State |
None |
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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:
|
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Georgia Payroll Taxes
11 Steps to Compliance in the Peach StateYou 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.

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. |

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 |
|
State |
|
Local |
None |

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
Federal | |
---|---|
Flat Rate Witholding 25% | Pay Over $1 Million 39.6% |
State | |
Flat Rate Witholding |
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 3 employees. |
Can be purchased from one of two state-approved carriers or you can apply to be self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Hawaii Payroll Taxes
11 Steps to Compliance in the Aloha StateYou 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.

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. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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. |
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. |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Idaho Payroll Taxes
11 Steps to Compliance in the Gem StateYou 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.

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. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Illinois Payroll Taxes
11 Steps to Compliance in the Land of LincolnYou 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.

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 |
Illionois
cities and counties
with their own minimum wage laws
|
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. |

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 |
|
State |
|
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. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Indiana Payroll Taxes
11 Steps to Compliance in the Hoosier StateYou 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.

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. |

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 |
|
State |
|
Local |
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. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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
Employer responsibility |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Iowa Payroll Taxes
11 Steps to Compliance in the Hawkeye StateYou 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.

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. |

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 |
|
State |
|
Local |
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. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 independent providers or businesses can apply to be self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Kansas Payroll Taxes
11 Steps to Compliance in the Sunflower StateYou 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.

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. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Kentucky Payroll Taxes
11 Steps to Compliance in the Bluegrass StateYou 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.

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. |

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 |
|
State |
|
Local |
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. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Louisiana Payroll Taxes
11 Steps to Compliance in the Pelican StateYou 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.

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.) |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 a private insurer or employers can apply to be self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Maine Payroll Taxes
11 Steps to Compliance in VacationlandYou 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.

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
Until December 31, 2017 |
$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 |
MAINE
CITIES AND COUNTIES
WITH THEIR OWN MINIMUM WAGE LAWS
|
Overtime Legislation
Federal standard (FLSA) | Threshold for salaried workers to qualify for overtime |
---|---|
Time and half after 40 hours. |
Payroll Frequency
At regular intervals not to exceed 16 days — each payment must include wages earned within 8 days of the payment date. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Maryland Payroll Taxes
11 Steps to Compliance in the Old Line StateYou 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.

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
Until June 30, 2017 |
$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 |
MARYLAND
CITIES AND COUNTIES
WITH THEIR OWN MINIMUM WAGE LAWS
|
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). |

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 |
|
State |
|
Local |
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. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 obtained through a licensed insurance company or by becoming self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Massachusetts Payroll Taxes
11 Steps to Compliance in the Bay StateYou 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.

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. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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.) |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Michigan Payroll Taxes
11 Steps to Compliance in the Great Lake StateYou 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.

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. |

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 |
|
State |
|
Local |
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. |
Employees must present a statement of nonresidence. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 a private insurance company or by earning self-insurance status. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Minnesota Payroll Taxes
11 Steps to Compliance in the North Star StateYou 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.

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
Businesses with less than $500,000 in gross revenue | ||
Minimum Wage |
$7.75 Until Dec. 31, 2017 |
7.87 Jan. 1, 2018 |
Min. Cash Wage (Tipped Employees) | $7.75 | 7.87 |
Maximum Tip Credit | N/A | N/A |
Youth Minimum Wage |
|
|
Businesses with $500,000 in gross revenue or more | ||
Minimum Wage |
$9.50 Until Dec. 31, 2017 |
$9.65 Jan. 1, 2018 |
Min. Cash Wage (Tipped Employees) | $9.50 | $9.65 |
Maximum Tip Credit | N/A | N/A |
Youth Minimum Wage |
|
|
MINNESOTA
CITIES AND COUNTIES
WITH THEIR OWN MINIMUM WAGE LAWS
|
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). |

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 |
|
State |
|
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. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |

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 from private insurers or businesses can apply to be self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Mississippi Payroll Taxes
11 Steps to Compliance in the Magnolia StateYou 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.

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. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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% workforce investment and training contribution rate) |
---|---|---|
$14,000 | None | 0.2 - 5.60% |
New employer rate (Graduated 1.20% year one, 1.30% year two and 1.40% year three — includes 0.20% workforce investment and training contribution rate) | Voluntary contribution | |
1.20 - 1.40% | None |

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 businesses with 5 or more employees. |
Can be acquired through private carriers or by becoming self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Missouri Payroll Taxes
11 Steps to Compliance in the Show Me StateYou 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.

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 |
$7.70
Until Dec. 31, 2017 |
$7.85
Jan. 1, 2017 |
---|---|---|
Min. Cash Wage (Tipped Employees) | $3.85 | $3.925 |
Maximum Tip Credit | $3.85 | $3.925 |
Youth Minimum Wage | $4.25 | |
MISSOURI
CITIES AND COUNTIES
WITH THEIR OWN MINIMUM WAGE LAWS
|
||
MINIMUM WAGE EXEMPTION
|
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
At least semi-monthly. |

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 |
|
State |
|
Local |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |
---|---|---|
$13,000 | None | 0.0 - 9.0% |
New employer rate | Voluntary contribution | |
2.7% | Yes |

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 5 or more employees. |
Can be obtained through a private carrier or by becoming self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Montana Payroll Taxes
11 Steps to Compliance in the Treasure StateYou 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.

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 |
$8.15
Until Dec. 31, 2017 |
$8.30
Jan. 1, 2018 |
---|---|---|
Min. Cash Wage (Tipped Employees) | $8.15 | $8.30 |
Maximum Tip Credit | N/A | N/A |
Youth Minimum Wage | $4.25 | |
A business not covered by the FLSA whose gross annual sales are $110,000 or less may pay $4.00 per hour. However, if an individual employee of such a business is producing or moving goods between states or is otherwise covered by the FLSA, that employee must be paid the greater of either the federal minimum wage or Montana's minimum wage. |
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
If there’s no set agreement between the employer and employees, the frequency is assumed to be semi-monthly. |

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 |
|
State |
|
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. |
|
Montana has an agreement with North Dakota. |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 administrative fund tax) |
---|---|---|
$31,400 | None | 0.13 - 6.30% |
New employer rate (Plus 0.18% administrative fund tax) Industry average | Voluntary contribution None | |
Industry average | None |

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 all employers. |
May be acquired through authorized insurers or by applying to be self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Nebraska Payroll Taxes
11 Steps to Compliance in the Cornhusker StateYou 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.

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 | $7.25 |
$9.00
for employers with 4 or more employees |
---|---|---|
Min. Cash Wage (Tipped Employees) | $2.13 | $2.13 |
Maximum Tip Credit | $5.12 | $6.87 |
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 a week. |
Less than $455 per week or $23,660 a year. |
Payroll Frequency
Employers may use a weekly, bi-weekly, semi-monthly or monthly payroll schedule. |

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 |
|
State |
|
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 |
---|---|---|
$9,000 | None | 0.0 - 5.4% |
New employer rate | Voluntary contribution | |
1.25% | Yes |

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 all employers. |
Can be acquired through a private insurer or by becoming self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
Nevada Payroll Taxes
11 Steps to Compliance in the Silver StateYou 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.

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
(if no employer benefits offered) $7.25(with benefits provided and received by employee) A minimum wage increase is planned for July 1, 2018. (Rates are yet to be announced.) |
$8.25
(if no employer benefits offered) $7.25(with benefits provided and received by employee) |
N/A | $4.25 |
Overtime Legislation
Federal standard (FLSA) | Threshold for salaried workers to qualify for overtime |
---|---|
Time and half after 40 hours in a week or 8 hours in a day. |
Less than $455 per week or $23,660 a year. |
Payroll Frequency
Nevada allows employers to pay executive, administrative and professional personnel on a monthly basis. All others must be semi-monthly. |

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 |
|
State |
None |
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 0.05% career enhancement program (CEP) fee. Employers paying 5.4% are exempt) |
---|---|---|
$29,500 | None | 0.30 - 5.4% |
New employer rate (Includes 0.05% CEP fee) | Voluntary contribution | |
3.0% | None |

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 obtained from private carriers or by applying to be self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |
Department of Employment, Training and Rehabilitation (DETR) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
New Hampshire Payroll Taxes
11 Steps to Compliance in the Granite StateYou 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.

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 | $3.26 ($3.2625) | $3.99 ($3.9875) | $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
New Hampshire requires that employees are paid weekly. Starting July 11, 2017, bi-weekly pay will also be allowed. Employers must formally request permission to follow any other schedules. |

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 |
|
State |
None |
Local |
None |

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
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |

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 0.2% variable administrative contribution assessment) |
---|---|---|
$14,000 | None | 0.1 - 7.5% |
New employer rate | Voluntary contribution | |
1.7% | None |

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 licensed provider or by becoming self-insured. |
Disability Insurance
Employer responsibility |
None |

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) |
|
State income and other business taxes |
|
State unemployment tax (SUTA) |

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. |
|
Form 941 (Federal income tax, Medicare, social security and tipped wages) |
|
Form 940 (FUTA) |
Annually — January 31 |
Wage detail reports (state income taxes, unemployment and other requirements) |
|
Must be sent to employees and filed with the SSA by January 31. |

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 number verification and year-end W-2 reporting. |
|
Federal minimum wage, overtime and workers’ compensation. |
|
State minimum wage, overtime and workers’ compensation. |
|
State income tax and employer taxes. |
|
Helpful articles on payroll and a range of small business topics. |

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.

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 today.
New Jersey Payroll Taxes
11 Steps to Compliance in the Garden StateYou 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.

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 |
$8.44
Until Dec. 31, 2017 |
$8.60
Jan. 1, 2018 |
Min. Cash Wage (Tipped Employees) | $2.13 | $2.13 |
Maximum Tip Credit | $6.31 | $6.47 |
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
New Jersey requires that most employees be paid on a minimum semi-monthly basis. However, executive, supervisory or other similar employees may be paid once a month. |

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 |
|
State |
|
Local |
Reciprocal Agreements
An agreement that lets residents of one state work in another state, while limiting taxation to the worker’s state of residency. |
|
New Jersey has a reciprocal agreement with Pennsylvania. |

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
Federal | |
---|---|
Flat Rate Witholding 25% | Pay Over $1 Million 39.6% |
State | |
Flat Rate Witholding
9.9%
if over $500,000 |
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
Health Savings Accounts | |
---|---|
Self-only (Employee + Employer)
$3,400 (2017) $3,450 (2018) |
Family (Employee + Employer)
$6,750 (2017) $6,900 (2018) |
Catch-up (Employee + Employer) $1,000 | |
Retirement Plans | |
Limit
$18,000 (2017) $18,500 (2018) |
Catch-up $6,000 |

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 (2017) $128,400 (2018) |