Federal Income Tax
All employers are required to withhold federal income tax from employees. The amount of tax is determined by the W-4 form the employee fills out.
State Income Tax
In states which have state income tax, employers must withhold state income taxes from employees, and pay those taxes periodically to the state.
Social Security and Medicare
All U.S. employers must deduct FICA (Social Security and Medicare) tax amounts from paychecks of all employees, and pay employer and employee portions of this tax. The Social Security portion is 6.2 percent of gross pay up to the annual maximum. The Medicare portion is 1.45 percent with no maximum.
Federal Unemployment Tax
Employers are required to pay federal unemployment taxes to provide benefits to employees who have lost their jobs. Employees do not contribute to this tax. Employers contribute based upon their gross payroll (the gross amount paid to all employees).
State Unemployment Tax
In addition to federal unemployment taxes, most states require you to participate in the state unemployment tax plan, and to pay unemployment taxes.
Worker's Compensation Taxes
Employers must provide benefits for employees who incur illnesses or injuries because of their work. These benefits are governed by state worker's compensation laws and paid for by employer contributions to state worker's compensation funds.
