When outsiders think of Louisiana, they think of Mardi Gras and Bourbon Street. As a Louisianan, you know full well that the state extends way beyond The Big Easy. You like the uniqueness of having parishes instead of counties and the slower pace of life. You cheer for good old-fashioned SEC football. You love Louisiana, and that’s why you started a small business here. But you know one thing sure ain’t easy, and that’s calculating your payroll taxes.
We definitely don’t think payroll taxes are easy, but we do want to make it as easy as possible for you, so we’ve designed a nifty payroll calculator that can figure out all of the federal and Louisiana state payroll taxes for you and your employees. All you have to do is input wage and W-4 information for each employee into the calculator and let it do the rest of the work.
Federal Payroll Taxes
First of all, let’s calculate federal payroll taxes for the sake of Uncle Sam. You can calculate all your employees’ federal withholdings, as well as any additional taxes your business is responsible for paying.
Here’s a quick rundown of the components that go into federal tax withholdings. For a more detailed explanation on all of the steps below, head on over to our comprehensive step-by-step guide.
- Gross wages, which is simply the amount of money an employee has earned during the last pay period.
- For hourly employees, multiply the number of hours worked by their pay rate — and make sure you don’t forget to take overtime into consideration.
- For salaried employees, divide each employee’s annual salary by the number of pay periods you have over the course of a year.
- Bonuses, commissions, and tips are all part of gross wages as well.
- Calculate any pre-tax withholdings. If your employees have 401(k) accounts, flexible spending accounts (FSA) or any other pre-tax withholdings, subtract them from gross wages prior to applying payroll taxes.
- Deduct federal income taxes, which can range from 0% to 37%. We won’t get into the nitty-gritty here, but you can find further withholding information through the IRS Publication 15-T.
- Deduct and match any FICA taxes to cover Medicare and Social Security taxes:
- For Social Security tax, withhold 6.2% of each employee’s taxable wages until they have earned $137,700 in a given calendar year. Employers must match this tax.
- For Medicare tax, withhold 1.45% of each employee’s taxable wages until they have earned $200,000 in a given calendar year. Employers also must match this tax. For employees who earn more than $200,000 per year, you’ll need to withhold an Additional Medicare Tax of 0.9%, which brings the total employee Medicare withholding above $200,000 to 2.35%. Employers are not responsible for paying the Additional Medicare Tax.
- Pay FUTA unemployment taxes, which is 6% of the first $7,000 of each employee’s taxable income. FUTA taxes come with a huge caveat that you will want to know about. You can claim a tax credit of up to 5.4% for state unemployment tax you pay, as long as you pay in full and on time. It’s an easy way to save a whopping 90%, so make sure you take advantage! Only you as the employer are responsible for paying FUTA taxes, so you don’t need to withhold FUTA from your employees’ paychecks.
- Subtract any post-tax deductions. Most of your employees won’t have any post-tax deductions, but you might need to withhold things like court-ordered wage garnishments, child support, etc. Make sure you take these into consideration as well.
Louisiana State Payroll Taxes
Now that we’re done with federal taxes, let’s look at Louisiana income taxes. The state charges a progressive income tax, meaning the more money your employees make, the higher the income tax. The tax rate ranges from 2% on the low end to 6% on the high end.
Louisiana does not have any local city taxes, so all of your employees will pay only the state income tax.
Let us handle payroll for you
OnPay processes payroll and automates all your tax payments and filings.
Louisiana State Unemployment Insurance (SUI)
As an employer in Louisiana, you have to pay unemployment insurance to the state. The rate ranges from 0.09% to 6.2% on the first $7,700 in wages paid to each employee in a calendar year.
New employers pay between 1.14% and 2.85%, depending on the industry.
Cut Those Paychecks!
There you have it. You just made payroll taxes look easy. You’ve checked it off your to-do list so you can move onto the important things. Once each employee’s net pay is calculated (taking deductions and withholdings into consideration), you’re in the clear.
All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and UI taxes. Those numbers can add up quickly!
You will need to use Form 941 to file federal taxes quarterly, and Form 940 to report your annual FUTA tax. You can pay taxes online using the EFTPS payment system. More information about employment tax due dates can be found here.
Additional Louisiana Payroll Tax Resources:
If you would like to learn more, here are some helpful links that can help you become a payroll whiz!
Louisiana Department of Revenue (855) 307-3893 | Employer Withholding Tax | Business Registration | File & Pay Taxes Online | Withholding Tax FAQs
Louisiana Workforce Commission Department of Labor (225) 342-3111 | Unemployment Insurance | Wage and Tax Reporting Services