Updated January 7, 2021
Pennsylvania is rooted in history. It’s where the first presidential manor stood, where the first computer was built, where the first daily newspaper was published, and where the stars and stripes were first stitched together. It’s even where Punxsutawney Phil first poked his head out of the thawing winter ground to reveal the arrival, or delay, of spring. But while history remains firm in its truth, payroll taxes are ever-evolving, sometimes changing on a yearly basis. These changes may be intimidating, but our payroll tax calculator will keep everything steady for you during your payroll process.
When you use our payroll calculator, all you have to do is enter wage and W-4 information for your employees. After that, the calculator will process their gross pay, net pay, and deductions for both Pennsylvania and Federal taxes. The calculator will also tell you how much taxes you as the employer will be responsible for paying. Easy enough, right?
Let’s start with the federal payroll tax, the largest tax liability that your employees face. Below is an overview of the withholding process, but if you would like to learn more, check out our step-by-step guide, where we go over every withholding in detail.
a. Social Security Tax is 6.2% of each employee’s taxable wages, up to a wage limit of $142,800. This means that the employee’s maximum Social Security Tax for the year is $8,853.60. As an employer, you’re on the hook for this tax as well. You have to match your employee’s contribution dollar-for-dollar.
b.Medicare Tax is 1.45% of each employee’s taxable wages until they have earned $200,000 in a given calendar year. Once that earning amount surpasses $200,000, the rate is bumped up to 2.35%. The extra 0.9% tax for higher wage earners is called Additional Medicare Tax (super original, we know). As an employer, you’re only responsible for paying the first 1.45%, not the additional 0.9%.
As a small business owner, you must fill out Form PA-100 to register for a federal employer identification number for state withholding. Pennsylvania state income taxes are relatively simple with a 3.07% flat income tax rate. However, it isn’t the only tax you need to take into consideration. There is also a local Earned Income Tax (EIT) that goes up to almost 4%, depending on location. We’d list all the different rates, but we don’t have the time and you definitely don’t have the time, so you can find the withholding rates for the place your business calls home here.
Though there’s no state disability insurance in Pennsylvania, there is unemployment compensation.
You’ve calculated each employee’s net pay, factoring in all deductions and withholding requirements. Now, all that’s left to do is pat yourself on the back and write those paychecks! Pay your employees, set aside any contributions your company is responsible for, and try to make your own history. It doesn’t matter if you’re the groundhog or the president, history is history – it’s time to go out and make your own.
Our handy calculator can take you far, but if you’re thirsty for even more knowledge on payroll taxes, here are a couple more resources for your perusal:
Department of Labor & Industry, Office of Unemployment Compensation: UC Registration
PA Tax Talk: Department of Revenue’s Blog
Employer Withholding Guide: Personal Taxes (717) 787-8201 | Business Taxes (717) 787-1064