Free Payroll Tax Calculator and Tax Rates for Every State

If it’s time to pay your employees, you’re in the right place! Our free payroll tax calculator makes it simple to handle withholdings and deductions in any state. Employers can use it to calculate net pay, figure out how much to withhold, and know how much to include in employees’ paychecks.

Below our calculator, you’ll also find federal tax rates, state tax rates, and links to other employer tax calculators that you can use to check your work.

Have any questions about how to use this payroll calculator? We’ll go over the basics right here, but you can use our payroll processing guide to find definitions, tax forms, and detailed instructions for calculating payroll on your own.

To run payroll, you need to do seven things:

1. Get your business set up to run payroll

2. Figure out how much each employee earned

3. Calculate taxes you’ll need to withhold and additional taxes you’ll owe

4. Pay your employees by subtracting taxes (and any other deductions) from employees’ earned income

5. Remit taxes to state and federal authorities

6. File quarterly and year-end payroll tax forms

7. Give your employees and contractors W-2 and 1099 forms so they can do their taxes

The calculator above can help you with steps three and four, but it’s also a good idea to either double-check the calculator by using the payroll tax rates below, or save time and effort by using a reliable payroll service.

Federal Payroll Tax Rates

The steps our calculator uses to figure out each employee’s paycheck are pretty simple, but there are a lot of them. Here’s how it works, and what tax rates you’ll need to apply.

1. Figure out each employee’s gross wages. Gross wages are the total amount of money your employee earned during the current pay period. The math works a little differently for salaried employees, hourly employees and contractors.

   1. Hourly employees: You’ll need to multiply the number of hours your employee worked by their hourly pay rate. If they worked any overtime hours, make sure to calculate those hours at the overtime rate.
   2. Salaried employees: A salaried employee is only paid a fraction of their annual salary each paycheck, so divide that employee’s annual salary by the number of pay periods you’ll have each year.
   3. Contractors: Advance to “Go” and collect $200! You actually don’t have to withhold any payroll taxes for contractors. Just pay them whatever’s on their invoice, but remember that you’ll need to send each contractor a 1099 form at the end of the year. Keeping good payroll records will make that process a lot easier.

2. Deduct any pre-tax withholdings. Payroll taxes aren’t the only thing to exclude from employees’ paychecks. Make sure to deduct for things like health and retirement benefits. The process for documenting and remitting these funds will vary depending on your benefits providers. Note that many services can be integrated with payroll software, which allows you to automate your deductions.

3. Deduct and match any FICA taxes: FICA, the Federal Insurance Contributions Act, is one of the many payroll acronyms you’ll soon get to know and love. It simply refers to the Medicare and Social Security taxes employees and employers have to pay:

   1. Social Security tax: Withhold 6.2% of each employee’s taxable wages until they earn gross pay of $137,700 in a given calendar year. The maximum an employee will pay in 2020 is $8,537.40. As the employer, you must also match your employees’ contributions.
   2. Medicare tax: Under FICA, you also need to withhold 1.45% of each employee’s taxable wages for Medicare. Employers must match this tax as well. There’s no withholding limit like the one for Social Security, but well-compensated employees who earn more than $200,000 must pay an Additional Medicare Tax of 0.9%. You don’t have to match the 0.9%, but you should include it in your withholding calculations.
4. Pay FUTA unemployment taxes: Employers are solely responsible for paying federal unemployment taxes. The tax rate is 6% of the first $7,000 of taxable income an employee earns annually. If your company is required to pay into a state unemployment fund, you may be eligible for a tax credit.
5. Deduct federal income taxes, which can range from 0% to 37%. Withholding information can be found through the IRS Publication 15-T.
6. Subtract any post-tax deductions: Some employees may be responsible for court-ordered wage garnishments or child support. They may also choose to make post-tax contributions to savings accounts, elective benefits (like life insurance), or other withholdings.

State-by-State Tax Rates

In addition to federal taxes, employers must calculate and apply the appropriate state and local tax rates. The math works exactly the same, but the taxes levied by each state can vary dramatically. For example, seven states have no income tax at all. Others have state-specific equivalents of FICA and FUTA that employers will need to apply.

Choose your state below to find 2020 tax rates and other key information: