Payroll Tax Calculator Hourly and Salary: Complete Guide 2024

Understanding Payroll Taxes

Payroll taxes are mandatory deductions from employee wages that fund Social Security, Medicare, unemployment insurance, and other government programs. Both employers and employees share responsibility for these taxes, with specific rates and wage bases that change annually.

Types of Payroll Taxes

Federal Insurance Contributions Act (FICA)

FICA taxes fund Social Security and Medicare programs:

Social Security Tax (2024)

• Rate: 6.2% (employee) + 6.2% (employer) = 12.4% total
• Wage base: $160,200 (maximum taxable wages)
• Maximum tax: $9,932.40 per person

Medicare Tax (2024)

• Rate: 1.45% (employee) + 1.45% (employer) = 2.9% total
• Wage base: No limit (all wages taxed)
• Additional Medicare Tax: 0.9% on wages over $200,000 (employee only)

Federal Unemployment Tax Act (FUTA)

• Rate: 6.0% (employer only)
• Wage base: First $7,000 per employee
• Credit: Up to 5.4% for state unemployment taxes
• Effective rate: Usually 0.6% after credit

State Unemployment Insurance (SUI)

• Rates vary by state: 0.1% to 15%
• Wage bases vary: $7,000 to $52,700
• Experience rating: Rates based on layoff history
• New employer rates: Usually 2.7% to 3.4%

Federal Income Tax Withholding

2024 Tax Brackets (Single)

• 10%: $0 - $11,000
• 12%: $11,001 - $44,725
• 22%: $44,726 - $95,375
• 24%: $95,376 - $182,050
• 32%: $182,051 - $231,250
• 35%: $231,251 - $578,125
• 37%: $578,126+

2024 Tax Brackets (Married Filing Jointly)

• 10%: $0 - $22,000
• 12%: $22,001 - $89,450
• 22%: $89,451 - $190,750
• 24%: $190,751 - $364,200
• 32%: $364,201 - $462,500
• 35%: $462,501 - $693,750
• 37%: $693,751+

Form W-4 and Withholding

The 2020 W-4 form uses a five-step process:

1. Personal information (name, address, SSN, filing status)
2. Multiple jobs or spouse works (use worksheet or online calculator)
3. Claim dependents ($2,000 per qualifying child, $500 per other dependent)
4. Other adjustments (additional income, deductions, extra withholding)
5. Signature and date

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Calculating Payroll Taxes for Hourly Employees

Step 1: Calculate Gross Pay

Regular Hours: Hours worked × Hourly rate

Overtime Hours: Overtime hours × (Hourly rate × 1.5)

Total Gross Pay: Regular pay + Overtime pay

Example: Hourly Employee

• Hourly rate: $20.00
• Regular hours: 40
• Overtime hours: 5
• Regular pay: 40 × $20 = $800
• Overtime pay: 5 × ($20 × 1.5) = $150
• Gross pay: $950

Step 2: Calculate Payroll Tax Deductions

• Social Security: $950 × 6.2% = $58.90
• Medicare: $950 × 1.45% = $13.78
• Federal income tax: Based on W-4 and tax tables
• State income tax: Varies by state

Calculating Payroll Taxes for Salary Employees

Step 1: Determine Pay Period Gross

Weekly: Annual salary ÷ 52

Bi-weekly: Annual salary ÷ 26

Semi-monthly: Annual salary ÷ 24

Monthly: Annual salary ÷ 12

Example: Salary Employee

• Annual salary: $60,000
• Pay frequency: Bi-weekly (26 pay periods)
• Gross per paycheck: $60,000 ÷ 26 = $2,307.69

Step 2: Calculate Payroll Tax Deductions

• Social Security: $2,307.69 × 6.2% = $143.08
• Medicare: $2,307.69 × 1.45% = $33.46
• Federal income tax: Based on annualized wages and W-4
• State income tax: Varies by state

State-Specific Payroll Taxes

States with No Income Tax

No state income tax withholding required:

• Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming

States with Flat Tax Rates

• Colorado: 4.4%
• Illinois: 4.95%
• Indiana: 3.23%
• Massachusetts: 5.0%
• Michigan: 4.25%
• North Carolina: 4.75%
• Pennsylvania: 3.07%
• Utah: 4.85%

States with Additional Payroll Taxes

State Disability Insurance (SDI)

• California: 0.9% on wages up to $153,164
• Hawaii: 0.5% on wages up to $57,000
• New Jersey: 0.47% on wages up to $151,900
• New York: 0.5% on wages up to $120
• Rhode Island: 1.1% on wages up to $71,000

Paid Family Leave

• California: 0.9% on wages up to $153,164
• New Jersey: 0.14% on wages up to $151,900
• New York: 0.455% on wages up to $120
• Rhode Island: 1.1% on wages up to $71,000
• Washington: 0.4% on wages up to $162,000

Local Payroll Taxes

Cities with Local Income Tax

• New York City: 3.078% - 3.876%
• Philadelphia: 3.8712%
• Detroit: 2.4%
• Cleveland: 2.5%
• St. Louis: 1%
• Kansas City, MO: 1%

Transit Taxes

• New York MTA: 0.34% on wages over $11,000
• Oregon Transit: Various rates by district

Pre-Tax Deductions

Common Pre-Tax Benefits

• Health insurance premiums
• Dental and vision insurance
• 401(k) contributions
• Flexible Spending Accounts (FSA)
• Health Savings Accounts (HSA)
• Life insurance premiums (up to $50,000)
• Commuter benefits
• Dependent care assistance

Impact on Payroll Taxes

Pre-tax deductions reduce:

• Federal income tax
• State income tax
• Social Security tax
• Medicare tax
• FUTA tax
• SUI tax

Sample Payroll Calculations

Example 1: Hourly Employee in California

• Gross pay: $1,200 (bi-weekly)
• Pre-tax deductions: $150 (health insurance, 401k)
• Taxable wages: $1,050

Tax Calculations:

• Social Security: $1,050 × 6.2% = $65.10
• Medicare: $1,050 × 1.45% = $15.23
• Federal income tax: $105 (estimated)
• CA state tax: $42 (estimated)
• CA SDI: $1,050 × 0.9% = $9.45
• CA PFL: $1,050 × 0.9% = $9.45

Net Pay Calculation:

• Gross pay: $1,200.00
• Pre-tax deductions: -$150.00
• Total taxes: -$246.23
• Net pay: $803.77

Example 2: Salary Employee in Texas

• Annual salary: $75,000
• Pay frequency: Monthly
• Gross pay: $6,250
• Pre-tax deductions: $400
• Taxable wages: $5,850

Tax Calculations:

• Social Security: $5,850 × 6.2% = $362.70
• Medicare: $5,850 × 1.45% = $84.83
• Federal income tax: $875 (estimated)
• State income tax: $0 (Texas)

Net Pay Calculation:

• Gross pay: $6,250.00
• Pre-tax deductions: -$400.00
• Total taxes: -$1,322.53
• Net pay: $4,527.47

Employer Payroll Tax Responsibilities

Employer-Paid Taxes

• Social Security: 6.2% (matches employee contribution)
• Medicare: 1.45% (matches employee contribution)
• FUTA: 0.6% (after state credit)
• SUI: Varies by state and experience rating
• Workers' compensation: Varies by industry and state

Deposit Requirements

Monthly Depositors

• Lookback period: Less than $50,000 in taxes
• Deposit deadline: 15th of following month

Semi-Weekly Depositors

• Lookback period: $50,000 or more in taxes
• Wednesday-Friday paydays: Deposit by following Wednesday
• Saturday-Tuesday paydays: Deposit by following Friday

Payroll Tax Forms and Reporting

Quarterly Forms

• Form 941: Employer's quarterly federal tax return
• Form 940: Annual FUTA tax return
• State quarterly returns: Vary by state

Annual Forms

• Form W-2: Wage and tax statement (due January 31)
• Form W-3: Transmittal of wage and tax statements
• Form 1099-NEC: Non-employee compensation (contractors)

Common Payroll Tax Mistakes

Classification Errors

• Misclassifying employees as contractors
• Incorrect exempt vs non-exempt status
• Wrong state for remote workers

Calculation Errors

• Incorrect overtime calculations
• Wrong tax rates or wage bases
• Forgetting to update for new tax year

Compliance Issues

• Late tax deposits
• Missing quarterly filings
• Incorrect W-2 information

Using Our Payroll Tax Calculator

Our payroll tax calculator helps you:

• Calculate accurate payroll taxes for any state
• Handle both hourly and salary employees
• Include pre-tax deductions
• Factor in local taxes where applicable
• Estimate employer tax costs

Simply enter the employee's pay information, location, and deductions to get accurate tax calculations for both employee and employer.

Year-End Payroll Considerations

Social Security Wage Base

• Monitor high earners approaching wage base limit
• Stop Social Security tax once limit reached
• Continue Medicare tax (no wage base limit)

Bonus Payments

• Supplemental wage rate: 22% federal withholding
• Aggregate method: Add to regular wages
• FICA taxes: Apply to all bonus payments

Conclusion

Accurate payroll tax calculation is essential for compliance and proper employee compensation. Whether you're processing payroll for hourly or salary employees, understanding federal, state, and local tax requirements helps ensure accurate withholdings and avoid costly penalties. Use our payroll tax calculator to simplify the process and ensure your payroll calculations are accurate and compliant with current tax laws.