Payroll taxes fund Social Security and Medicare—and they're one of the largest tax burdens workers face. This calculator helps employers and employees understand the true cost of payroll taxes and plan accordingly.
How This Calculator Works
This calculator computes payroll tax obligations:
- Gross Wages: Total compensation subject to payroll tax
- Social Security Tax: 6.2% each from employer and employee (12.4% total)
- Medicare Tax: 1.45% each from employer and employee (2.9% total)
- Additional Medicare: 0.9% on wages over $200,000 (employee only)
- Self-Employment Tax: Combined employer + employee portions
- Total Tax Burden: Complete payroll tax picture
The Formula Explained
Employee Portion:
- Social Security: 6.2% × wages (up to $168,600 wage base for 2024)
- Medicare: 1.45% × all wages
- Additional Medicare: 0.9% × wages over $200,000
Employer Portion: Same FICA rates (Social Security + Medicare)
Self-Employed: Pay both portions (15.3% on net self-employment income)
Step-by-Step Example
$100,000 Annual Salary
| Tax Type | Employee | Employer | Total |
| Social Security (6.2%) | $6,200 | $6,200 | $12,400 |
| Medicare (1.45%) | $1,450 | $1,450 | $2,900 |
| Total FICA | $7,650 | $7,650 | $15,300 |
The true cost of this employee is $107,650 (salary + employer taxes).
Frequently Asked Questions
What are payroll taxes?
Payroll taxes are taxes on wages that fund Social Security and Medicare (FICA taxes). Employees see these as deductions on their paychecks. Employers pay matching amounts. Unlike income tax, payroll taxes are flat rates applied to all workers regardless of filing status or deductions.
What's the difference between payroll tax and income tax?
Payroll taxes: Flat rates for Social Security (6.2%) and Medicare (1.45%), funding specific programs. Income tax: Progressive rates (10-37%) based on total income and deductions, funding general government. Both are withheld from paychecks, but they serve different purposes.
What is the Social Security wage base?
The Social Security tax only applies to wages up to a cap ($168,600 in 2024, adjusted annually for inflation). Earnings above this limit are not subject to Social Security tax. Medicare has no wage cap—the 1.45% (plus 0.9% additional) applies to all wages.
What is the Additional Medicare Tax?
High earners pay an extra 0.9% Medicare tax on wages over $200,000 ($250,000 married filing jointly). This is employee-only—employers don't match it. Combined with regular Medicare, high earners pay 2.35% on wages above the threshold.
How do self-employment taxes work?
Self-employed individuals pay both employer and employee portions—15.3% on net self-employment income (12.4% Social Security + 2.9% Medicare). However, you can deduct half of self-employment tax on your income tax return, and the tax applies to 92.35% of net earnings.
Do employers pay half my payroll taxes?
Yes and no. Employers legally match your FICA contributions (6.2% SS + 1.45% Medicare). However, economists generally believe workers bear most of this cost through lower wages. The employer portion is often considered part of your total compensation package.
How do payroll taxes affect my take-home pay?
On a $60,000 salary, payroll taxes take $4,590 (7.65%) before you receive a paycheck. This is separate from income tax withholding. Together with federal and state income taxes, total withholding often exceeds 25-35% of gross pay.
Are there any exemptions from payroll taxes?
Limited exemptions: (1) Some religious groups (with approved exemption), (2) Certain student workers at their university, (3) Some nonresident aliens, (4) Wages below the filing threshold (though employers still owe their share). Most workers cannot avoid payroll taxes.
Key Points to Remember
- You pay 7.65%: 6.2% Social Security + 1.45% Medicare
- Employer matches: True labor cost is salary + 7.65%
- Social Security caps: No SS tax above wage base ($168,600 in 2024)
- Medicare never caps: Applies to all wages (plus 0.9% over $200K)
- Self-employed pay both: 15.3% total, but deductions help