horizons logo
Start hiring

Payroll taxes
in USA.

SALARY PAYMENT IN United States Dollar (USD, $)

CONTRACT LANGUAGES English

PAYROLL TAX Varies per state

PAYROLL CYCLE Bi-weekly or weekly 

TIME TO HIRE 12 hours

Hire and pay talents
with Horizons in
180+ countries

United States

What is the average employer tax rate in USA?

In the United States, corporate income taxes are levied at both the federal and state level.

Federal corporate income tax is currently fixed at 21%.

Forty-four states and the District of Columbia collect corporate income tax with rates ranging from 2.5% to 11.5%.

Ohio, Nevada, South Dakota, Texas, Washington, and Wyoming do not levy corporate income tax, with corporations in these states only paying the federal tax rate of 21%.

What is the average employee tax rate in USA?

OECD data found that, in 2021, the average tax rate for a single employee in the United States was 28.4%.

Federal personal income tax in the United States follows a progressive system, with income tax rates levied via seven marginal tax brackets.

Taxable Income (USD)Tax rate 2023
$0 – $10,27510%
$10,276 – $41,77512%
$41,776 – $89,07522%
$89,076 – $170,05024%
$170,051 – $215,95032%
$215,951 – $539,90035%
$539,901+37%

 

State income tax rates vary. Forty-one states and the District of Columbia levy personal income taxes, whilst two states (New Hampshire & Tennessee) only tax income resulting from dividends and interest. The remaining seven states do not tax any personal income. 

Employer contributions in USA

In the USA, employers are required to contribute to a number of payroll taxes under the Federal Insurance Contributions Act (FICA) and Federal Unemployment Taxation Act (FUTA). 

FICA includes Social Security payments and Medicare coverage. 

Employer social security contributions total 6.20% on the first $160,200 of wages paid. Employer Medicare contributions are 1.45% with no earnings limit. 

FUTA funds the federal unemployment program. Employer contributions total 6% of the first $7,000 of an employee’s wages. A credit reduction (for eligible employers) can bring the FUTA contribution down to 0.6%.

Total employer payroll contributions are a minimum of 8.25%. 

As well as the federal payroll taxes, many states and some municipalities impose additional payroll taxes to cover programs such as short-term disability or paid family medical leave.

It is the law of the employee’s state of residence that governs employment agreements. State payroll taxes are therefore paid to the employee’s state of residence. 

Employee contributions in USA

Employees match the contributions of their employer under the FICA. This includes 6.20% for social security and 1.45% for Medicare contributions. There is an additional Medicare Tax of 0.9% for employees who receive wages over $200,000. 

Employees do not have to pay the FUTA. 

Hiring in USA, Made Easy

Your business can easily hire employees in USA without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.

FAQs

The Internal Revenue Service (IRS). 

Yes. Employers pay federal payroll taxes under the FICA & FUTA. Together, these federal payroll taxes amount to a minimum employer contribution of 8.25%. 

Federal payroll taxes are paid online using the Electronic Federal Tax Payment System – a free system provided by the U.S. Department of Treasury. 

Success stories from businesses we’ve helped enter and grow in new markets.

Client Testimonials

Get started with Horizons