Employer payroll taxes
Employer payroll taxes and employee cost in the US
For a W-2 employee, employer cost usually starts with gross wages and adds employer-paid payroll taxes, unemployment taxes, workers compensation, benefits, and payroll administration.
Calculate employer payroll taxes by state: enter one employee’s annual wages to separate FICA, FUTA and SUTA before adding benefits or insurance.
Federal components
Employer FICA is 7.65% of covered wages: 6.2% Social Security on the first $184,500 of 2026 earnings per employee, plus 1.45% Medicare with no wage cap (IRS Topic 751). FUTA is 6.0% on the first $7,000 of wages per employee, and drops to an effective 0.6% when the employer qualifies for the full 5.4% state unemployment tax credit (IRS Topic 759). Not every employer qualifies. California still owes the federal government an unpaid unemployment advance, so employers there are subject to a FUTA credit reduction and lose part of that 5.4%: their 2026 planning rate is 2.1%, or $147 per employee instead of $42 (U.S. Department of Labor). That figure is not final until November 10, 2026. See the California guide for the full calculation.
State and insurance components
SUTA is state-specific and employer-specific. Workers compensation depends on state, job classification, payroll, claims history, experience modifier, and carrier pricing.
Benefits benchmark
BLS Employer Costs for Employee Compensation is useful for broad benefits benchmarks, but the calculator lets users choose lean, standard, generous, or custom benefits assumptions.
Worked hiring-budget example
What an $85,000 hire looks like in Texas vs Washington
Hold the model inputs constant: $85,000 annual salary, 18% employer-paid benefits ($15,300), an office/professional role, basic payroll administration, and the 2026 new-employer/default SUTA setting. Federal payroll taxes stay the same; the state unemployment and workers compensation assumptions move the range.
Result: Washington's modeled midpoint is about $2,304 higher per year, but the low-to-high ranges overlap. That means the example supports planning—not the claim that every Washington hire costs more. Replace the model assumptions with your assigned SUTA rate, workers compensation quote, and actual benefits cost before acting.
Next decision: compare locations before providers
Open the state comparison
The comparison tool already starts at $85,000, 18% benefits, office/professional, and basic payroll. Choose Texas and Washington to reproduce this case.
Location settled? Use the resulting budget to compare payroll software, PEO, and HRIS options.
General planning estimate only. The ranges use EmployerCost's sourced 2026 model and are not exact payroll liability, tax, legal, insurance, compensation, or HR compliance advice.
Where the SUTA line lands in 2026
Employer FICA and FUTA are federal, but the unemployment-insurance line depends on the state. Frequently checked states, each linked to its sourced guide:
- Texas employer payroll taxes — 2.70% new-employer SUTA on $9,000
- Washington employer payroll taxes — employer-specific SUTA on $78,200
- Maryland employer payroll taxes — 2.60% new-employer SUTA on $8,500
- California employer payroll taxes — 3.40% new-employer SUTA on $7,000
- South Dakota employer payroll taxes — 1.75% new-employer SUTA on $15,000
- North Dakota employer payroll taxes — 1.00% new-employer SUTA on $46,600
- Montana employer payroll taxes — 1.18%–2.18% new-employer SUTA range on $47,300
- Arkansas employer payroll taxes — 2.00% new-employer SUTA on $7,000
- Alaska employer payroll taxes — 1.00% new-employer SUTA on $54,200
- Idaho employer payroll taxes — 1.00% new-employer SUTA on $58,300
See the sortable 2026 SUTA rate and wage base table for all 50 states and DC.