Updated: February 18, 2026
Published By:
Jon Davis
The terms FICA vs. FUTA vs. SUTA can feel like an avalanche of payroll acronyms. But if you’re an employer, understanding what each one means — and how they apply to your business — comes with the territory.
Payroll mistakes happen, but some are far more expensive than others. In a recent fiscal year, the IRS assessed more than $18.9 billion in penalties related to federal tax deposits. Knowing the basics of FICA vs. FUTA vs. SUTA can help you avoid common payroll errors and stay compliant.
Each of these taxes funds a different part of the social safety net and comes with its own employer responsibilities. Below, we’ll break down FICA vs FUTA vs SUTA so you can understand how they differ — and what’s required of your business.
Simply put, payroll taxes are a shared responsibility between employers and employees. As an employer, you withhold some payroll taxes from employee paychecks and pay others directly. You’re also responsible for calculating the correct amounts, making accurate payroll tax deductions, depositing taxes on time, and filing required federal and state forms. Pretty cut and dry, right?
Yet, HRO Today reports that 53% of businesses have incurred payroll penalties in the last five years for non-compliance.
Knowing which taxes fall under FICA, FUTA, and SUTA can help you avoid these costly errors.
FICA, FUTA, and SUTA each have distinct rules and wage bases.
The Federal Insurance Contributions Act (FICA) is a payroll tax that funds Social Security and Medicare. Both employees and employers contribute, but as an employer, you’re responsible for withholding your employees’ share and contributing a matching amount.
Current FICA tax rates are 6.2% of wages up to $184,500 for Social Security and 1.45% for Medicare, with no wage cap. Employers must match both amounts to achieve a total of 15.3%.
For example, an employee earning $50,000 in 2026 would have:
| FICA components | Employee withheld | Employer contribution | Total contribution |
| Social Security (6.2%) | $3,100 | $3,100 | $6,200 |
| Medicare (1.45%) | $725 | $725 | $1,450 |
| Total FICA taxes | $3,825 | $3,825 | $7,650 |
The Federal Unemployment Tax Act (FUTA) is a payroll tax paid only by employers to fund federal unemployment benefits. Unlike FICA, FUTA isn’t withheld from employee paychecks. It works alongside state unemployment taxes (SUTA) to provide a safety net for workers who lose their jobs.
Paying SUTA on time and in full can earn you credit against FUTA liability. The standard FUTA rate is 6% on the first $7,000 of each employee’s wages, but most employers qualify for a 5.4% SUTA credit, reducing the effective FUTA rate to 0.6%. Some employers may be eligible for the FUTA exemption:
FUTA taxes are paid quarterly and reported annually on IRS Form 940, due January 31, with a potential 10-day extension for timely filers. Note that because January 31 falls on a weekend in 2026, you have a small grace period and the due date is Monday, February 2.
Here’s how to calculate FUTA tax for employees earning $7,000 or more:
| FUTA component | Calculation | Amount |
| FUTA standard rate (6%) | $7,000 x 6/100 | $420 |
| Less maximum SUTA credit (5.4%) | $7,000 x 5.4/100 | $378 |
| FUTA tax due | $420 – $378 | $42 |
The State Unemployment Tax Act (SUTA) is a payroll tax employers pay on behalf of their employees to their state unemployment fund. Like FUTA, you don’t withhold SUTA from employees’ paychecks.
The difference between FUTA and SUTA is that FUTA is a federal tax, while SUTA is state-specific. Each state sets its own rules for wage bases and tax rates. Your SUTA costs will depend on your state and your business’s experience rating, which considers past unemployment claims.
New employers usually start with a standard rate that adjusts over time based on their claims history. Because wage bases differ by state, the taxable portion of each employee’s wage can also vary.
Here’s a side-by-side look at SUTA vs FICA vs FUTA to help you differentiate these payroll taxes.
| Comparison point | FICA | FUTA | SUTA |
| Level | Federal | Federal | State |
| What it funds | Social Security and Medicare | Federal unemployment benefits | State unemployment benefits |
| Who pays | Employer and employee | Employer only | Employer only |
| Withheld from employee pay | Yes | No | No |
| Wage base | Social Security is capped annually at $184,500
Medicare is uncapped |
First $7,000 of wages | Varies by state |
| Tax rate | 6.2% Social Security + 1.45% Medicare | 6% standard, usually 0.6% after credit | Varies by state and experience rating |
| Employer cost impact | Employer matches 6.2% Social Security + 1.45% Medicare | Effective 0.6% after SUTA credit on the first $7,000 of wages | Varies by state, wage base, and experience rating |
| Due dates | Withheld each paycheck; deposited semiweekly or monthly | Paid quarterly; reported annually on Form 940 (due Jan 31) | Varies by state, but often quarterly |
| Annual filing form | Form 941 and W-2 | Form 940 | State-specific form |
Now that we better understand each of these taxes and how they compare, let’s move on to some payroll mishaps that can affect your bottom line — which you’ll want avoid.
Payroll tax mistakes are common, but even small errors can lead to out-of-pocket costs, penalties, interest, hours spent fixing problems, and strained employee trust. Though every employer is unique, there are some common mishaps when processing payroll taxes.
Missing a payroll tax deadline can trigger penalties of up to 15% of your unpaid deposit. Often, late filing happens when deposit schedules change or when you overlook quarterly and annual filing dates.
Wage-based miscalculations can have serious consequences for both your business and employees. Applying the wrong wage base can lead to over- or under-withholding taxes, which often results in penalties and frustrated employees. Common miscalculations include:
If your business has employees in more than one state, it’s easy to run into trouble with SUTA. Each state has unique requirements, so applying one state’s rules across the board can lead to underpayment or overpayment.
“We tried a local payroll provider and a large payroll company before switching to OnPay, which has been far better at meeting our needs and providing great support whenever we reach out. With employees in many states requiring payroll tax registration in multiple jurisdictions, OnPay made this much easier than past providers, saving us time and money. The time I save allows me to better support my own customers.”
— Jeff Glazer, Griffon Prep
Fortunately, there are a number of payroll software solutions with tax compliance features that can go a long way toward making sure you never make these common mistakes. These payroll tools can automate filing and paying business payroll taxes (federal, state, and local) while managing all the calculations.
Though FICA, FUTA, and SUTA taxes seem like a lot to handle, you can simplify the process with automation. The right tool will shoulder much of the burden. It’ll automate tax calculations, deductions, filings, the application of current federal and state rates, and wage-base adjustments as employee earnings change throughout the year.
At OnPay, we’ll help you reduce payroll tax risks. With our solution, you can handle tax deposits and filings while flagging potential issues before they turn into penalties. If you operate in different states, our payroll tool has a built-in compliance feature to help you easily manage varying SUTA rules without added complexity. Get started with OnPay today to simplify your payroll processes and avoid costly mistakes.
Take a tour to see how easy payroll can be.
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.
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