Payroll Tax Rates 2026: FICA, FUTA and the 2027 Wage Base

For 2026, employers and employees each pay 6.2% Social Security tax on wages up to $184,500 and 1.45% Medicare tax on all wages, and employers add FUTA at 6.0% on the first $7,000, usually 0.6% after the state credit. Employees also owe 0.9% Additional Medicare Tax above $200,000. The Social Security Administration has already set the 2027 wage base at $192,300.

Those figures come from IRS Publication 15 (2026), Circular E and the Social Security Administration's contribution and benefit base table, both read on 21 October 2026. FUTA credit reductions come from the Department of Labor's FUTA credit reduction page. Every dollar total below is our arithmetic on those published rates, and state income and unemployment taxes are left out because each state sets its own.

Toolradar data: Toolradar, the software directory we run, tracks 76 payroll tools as of 20 October 2026; 16% are free, freemium or open source, and the median cheapest paid plan is $22/mo across the 22 that publish a price (Toolradar payroll ranking). Every one of them applies the rates below, so a payroll quote buys filing and deposits, not a lower tax bill.

2026 federal payroll tax rates at a glance

Sources: IRS Publication 15 (2026) for the rates, thresholds and withholding, and the SSA tax rate table for the self-employed split, both read 21 October 2026.

The combined FICA rate is 7.65% for each side, and neither rate moved from 2025: Publication 15 says the Medicare rate is unchanged and the SSA table shows the same split for every year since 1990. What changes every January is the Social Security wage base, so the year-to-year difference in an employer's bill sits almost entirely with employees paid above the old cap.

What one employee costs in federal payroll tax

The table below applies the 2026 rates to four annual salaries for a single W-2 employee, assuming the employer earns the full FUTA credit. It is our arithmetic, rounded to the cent where needed.

The employer's share caps out at $11,439 of Social Security per person in 2026, which is 6.2% of the 2026 wage base. Above that salary only Medicare keeps growing, so the effective rate drops: the $250,000 employee costs the employer about 6% in federal payroll tax, against roughly 7.7% for everyone under the cap.

The employee side runs the other way at the top. The same $250,000 earner has $11,439 of Social Security and $3,625 of Medicare withheld, plus $450 of Additional Medicare Tax on the $50,000 above the threshold, for $15,514 in total. The employer never matches that surtax, but it must start withholding it in the pay period in which wages pass $200,000 and keep withholding it through December.

For a team budget, multiply the right row by headcount. A 10-person company paying $50,000 each owes $38,670 a year in employer federal payroll tax before any state unemployment tax, our multiplication. Our guide to what payroll costs a small business adds the software and service fees on top of that tax line.

The Social Security wage base, 2022 to 2027

Source: SSA contribution and benefit base table, read 21 October 2026. The 2027 maximum is printed by SSA; the other maximums are 6.2% of each base, our arithmetic.

The base has risen 30.8% in five years, from $147,000 in 2022 to the 2027 figure, our calculation. The base follows the national average wage index, so it tends to climb every year, and the 2027 step adds $483.60 of employer tax for every employee paid at least $192,300. A company with 20 people above the new base should budget $9,672 more in employer Social Security for 2027 than for 2026 on those salaries alone, our multiplication.

The cap matters most for companies with a few high earners and for anyone paid a large bonus early in the year. Once an employee crosses the base, Social Security withholding stops for the rest of the calendar year, which raises take-home pay in the final months.

FUTA and the credit reduction states

FUTA is a 6.0% employer-only tax on the first $7,000 paid to each employee, and most employers pay just 0.6%, or $42 a person, because they can take a credit of up to 5.4% for state unemployment tax paid in full and on time. Paying the state late or on a narrower wage base shrinks that credit, which is the most common way a small employer ends up with a bigger FUTA bill than expected.

The second way is living in a credit reduction state: a state that has carried a federal unemployment loan for two or more consecutive January 1 dates. Employers there lose part of the 5.4% credit and pay the difference with Form 940.

Sources: DOL actual FUTA credit reductions, 2010 to 2025 and potential 2026 credit reductions, dated 15 January 2026, read 21 October 2026. Extra FUTA is our arithmetic on the $7,000 base.

The 2026 California figure is not final. The Department of Labor sets the final list after November 10 of each year, and its January estimate treats the 3.8% add-on as preliminary; the rules allow that add-on to be waived and replaced by a smaller one, and California received add-on relief for 2025. If the full 5.3% potential reduction stood, a California employer would pay 5.9% on the first $7,000, or $413 per employee instead of $42, our arithmetic. Check the DOL page in mid-November before you close the year, and confirm the figure your payroll provider uses for Form 940.

FUTA applies once you pay wages of $1,500 or more in any calendar quarter of 2025 or 2026, or employ someone on at least part of a day in 20 or more weeks. Household employers have a separate $1,000-per-quarter test, and farm employers have their own. Deposits are due once the quarterly FUTA liability passes $500; below that, it carries forward to the next quarter.

Other 2026 thresholds that change the payroll calendar

Source: IRS Publication 15 (2026), read 21 October 2026.

The $2,000 information reporting threshold is the change most small employers will notice in January: contractors paid less than that in 2026 no longer need a 1099-NEC, and the IRS says the threshold will be inflation-adjusted after 2026. Our step-by-step guide to running payroll yourself walks through the deposit calendar and the forms that go with these thresholds.

Five findings from the 2026 numbers

1. FICA rates have not moved since 1990. Every SSA table row since then shows the same employee and employer split; only the wage base changes.
2. High earners cost less in payroll tax as a share of pay. At $250,000 the employer pays about 6% against about 7.7% at $100,000, because Social Security stops at the base.
3. FUTA is the smallest line for most employers, until a state borrows. At $42 per head it is a rounding error, but a credit reduction can multiply it several times over.
4. The 2027 base is already known. Publishing it in October lets finance teams set next year's payroll budget before the year starts, with $483.60 more employer tax per capped employee.
5. The 1099 change cuts paperwork, not tax. Moving the threshold to $2,000 removes forms for small contractor payments; it does not change what anyone owes.

Frequently asked questions

What are the payroll tax rates for 2026?

Employers and employees each pay 6.2% Social Security on wages up to $184,500 and 1.45% Medicare on all wages, a combined 7.65% per side. Employees pay an extra 0.9% Medicare on wages above $200,000. Employers also pay FUTA of 6.0% on the first $7,000, usually 0.6% after the state credit.

What is the Social Security wage base for 2027?

The SSA has set the 2027 base at $192,300, $7,800 above the 2026 base. At the unchanged 6.2% rate, the maximum Social Security tax for 2027 is $11,922.60 for the employee and the same for the employer.

How much does FUTA cost per employee in 2026?

With the full 5.4% state credit, FUTA is 0.6% of the first $7,000, or $42 per employee for the year. Without any credit it is 6.0%, or $420. Employers in a credit reduction state pay more; California's 2025 reduction of 1.2% added $84 per employee, our arithmetic on DOL figures.

Does the employer pay the 0.9% Additional Medicare Tax?

No. The 0.9% Additional Medicare Tax is employee-only. The employer must withhold it from wages above $200,000 paid to one employee in a calendar year, starting in the pay period in which wages cross that line, and the employer does not pay a matching share.

Is there a cap on Medicare tax?

No. Medicare tax of 1.45% for each side applies to every dollar of wages, with no wage base limit. Only the Social Security portion stops, at the 2026 wage base, which is why the employer's effective payroll tax rate falls for salaries above that amount.

Which states are FUTA credit reduction states for 2026?

The Department of Labor lists California and the US Virgin Islands as potential 2026 credit reduction states, with potential reductions of 5.3% and 4.8%. The final list is set after November 10, 2026, and add-ons can be waived, so confirm the final figure on the DOL page before filing Form 940.

Methodology and sources

Rates and thresholds are taken from IRS Publication 15 (2026), wage bases from the SSA contribution and benefit base table and tax rate history from the SSA tax rate table, all read on 21 October 2026. FUTA credit reductions are from the Department of Labor's FUTA credit reduction files. The cost tables, totals and growth percentages are our arithmetic on those published figures; they cover federal taxes only and exclude state income tax, state unemployment tax and local taxes. We will update the page when the DOL publishes the final 2026 credit reduction list and when Publication 15 (2027) is released. See how we work in our editorial policy.

To turn these rates into a provider choice, compare the best payroll software for small business, the wider payroll software ranking and the best free payroll software. Price checks for two common picks are in Gusto pricing and Patriot Payroll pricing, with Toolradar profiles of Gusto and Patriot Software. Employers weighing an outsourced setup can read how much a PEO costs, and the labor-cost context is in our HR statistics for 2026.

Cite this: HRpresso, "Payroll Tax Rates 2026: FICA, FUTA and the 2027 Wage Base", November 2026.

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