Employer Payroll Taxes vs. Employee: FUTA, SUTA & FICA (2026)

Disclaimer: This article is for educational purposes only and is not tax, legal, or financial advice. Tax rules change periodically, always check current IRS/state guidance or consult a professional.

Quick Answer: Who Pays FUTA, SUTA, and FICA?

There are three main payroll taxes, and they do not all hit your paycheck. FICA (Social Security and Medicare) is split: you pay 7.65% and your employer pays a matching 7.65%. FUTA (federal unemployment) and SUTA (state unemployment) are paid by your employer, not you, in almost every state.

If you have ever seen “unemployment tax” and assumed it was coming out of your wages, it usually is not. To see exactly what does come out of your check, the Pay44 paycheck calculator breaks down your FICA, federal, and state withholding by state.

Payroll Taxes at a Glance: Employer-Paid vs. Employee-Paid (2026)

Most articles about FUTA and SUTA are written for business owners. This one is written for the person reading a pay stub, wondering which of these taxes is coming out of their own money.

Here is the whole split in one table.

Tax	Who pays	2026 rate	Wage base	What it funds
Social Security (FICA)	Employee + employer	6.2% each (12.4% total)	First $184,500	Retirement, disability, survivor benefits
Medicare (FICA)	Employee + employer	1.45% each (2.9% total)	No cap	Hospital insurance
Additional Medicare	Employee only	0.9%	Wages over $200,000	Medicare (high earners)
FUTA	Employer only	0.6% effective (6.0% gross)	First $7,000	Federal unemployment system
SUTA	Employer only (3 state exceptions)	Varies by state	Set by each state	State unemployment benefits

Once it is laid out, the split is easy to read. FICA is the only payroll tax you and your employer share. FUTA and SUTA sit entirely on the employer’s side of the ledger, with three small exceptions we cover below. Income tax withholding is separate again, and that one is all yours.

The Tax You Split With Your Employer: FICA

FICA stands for the Federal Insurance Contributions Act, and it is the payroll tax most people actually feel. It has two parts.

Social Security: 6.2% from you, 6.2% from your employer. In 2026, this applies only to your first $184,500 of wages. After that, the 6.2% stops for the rest of the year.
Medicare: 1.45% from you, 1.45% from your employer, on every dollar with no cap.

Add your two shares together and you pay 7.65% of gross wages. Your employer pays a matching 7.65% on top of your salary, which brings the combined FICA rate to 15.3%.

There is one FICA piece your employer does not match. The Additional Medicare Tax is an extra 0.9% on wages above $200,000 (single filers), and it comes only from the employee. Your employer withholds it once your wages pass $200,000 in a year, but it never appears on their side of the bill.

For a closer look at these two taxes, with dollar examples at different salaries, see our guide to FICA taxes explained. To model your own numbers, the FICA tax calculator shows your Social Security and Medicare withholding for any salary.

FUTA: The Federal Unemployment Tax Your Employer Pays (Not You)

FUTA is the Federal Unemployment Tax Act. It funds the federal side of the unemployment insurance system, including loans to states and administrative costs. You do not pay a cent of it.

The headline rate is 6.0% on the first $7,000 of each employee’s annual wages. That sounds steep, but almost no employer pays the full amount.

Employers who pay their state unemployment tax on time earn a credit of up to 5.4%. That drops the effective FUTA rate to just 0.6%, which works out to about $42 per employee per year ($7,000 x 0.6%). Employers report and pay FUTA once a year on IRS Form 940.

A couple of details are worth knowing:

The $7,000 wage base has not moved since 1983. FUTA is capped at the first $7,000 each worker earns, so the tax maxes out early in the year and then stops.
Credit-reduction states pay more. When a state borrows from the federal government to pay unemployment benefits and does not repay in time, employers in that state lose part of the 5.4% credit and owe extra FUTA. For 2026, the credit-reduction list includes California and the U.S. Virgin Islands. This list is finalized late in the year, so it is worth confirming against the IRS Form 940 instructions.

None of this touches your paycheck. FUTA is purely a cost of doing business that your employer carries.

SUTA: State Unemployment Tax and Why It Varies So Much

SUTA (State Unemployment Tax Act), sometimes called SUI, is the state-level version of FUTA. It pays the actual unemployment benefits your state sends to laid-off workers. Like FUTA, it is an employer tax in most of the country.

This is where it gets messy. Every state runs its own SUTA system. Each one sets its own wage base and its own range of rates.

Wage bases vary a lot. Some states tax only the first $7,000 or so of wages, matching FUTA. Others tax $40,000, $50,000, or more per employee. The higher the base, the more SUTA an employer owes per worker.
Rates are experience-rated. States assign each employer a rate based on how many of its former employees have filed for unemployment. A company that rarely lays anyone off pays a low rate. One with heavy turnover pays more. New employers usually start at a fixed standard rate until they build a history.

The Three States Where Employees Also Pay SUTA

In most states, SUTA is 100% on the employer. But in Alaska, New Jersey, and Pennsylvania, employees chip in a small share through payroll withholding. If you work in one of these states, you may see a state unemployment or disability line on your pay stub. It is usually a fraction of a percent, far smaller than your FICA deduction.

Because unemployment rules, income tax rules, and wage bases all change at the state line, the same salary nets a different amount depending on where you work. That is exactly why Pay44 covers take-home pay for all 50 states. If you are comparing locations, our post on states with no income tax shows how much the state line can move your net pay.

What This Means for Your Paycheck (and the True Cost of Your Job)

Now, back to the check that lands in your bank account.

What actually comes out of your paycheck:

FICA: 7.65% (Social Security + Medicare)
Federal income tax withholding (based on your W-4)
State and local income tax, where it applies
A small SUTA share only if you work in Alaska, New Jersey, or Pennsylvania

FUTA and standard SUTA are not on that list. They never reduce your gross pay.

Your employer, though, is paying a stack of taxes you never see. Economists call this the true cost of employment, and it is why your total value to a company is higher than your salary. Here is a worked example for a $60,000 salaried employee in a typical state.

Gross salary: $60,000
Employer FICA match (7.65%): $4,590
FUTA (0.6% on first $7,000): $42
SUTA (example: 2.7% on a $12,000 base): $324
Total employer payroll tax: about $4,956
Real cost of this hire: roughly $64,956, before benefits

In this example, payroll taxes add about 8% on top of the salary. In states with high SUTA wage bases and rates, the add-on climbs closer to 10% or more. Benefits, insurance, and equipment push the true cost higher still.

To run your own numbers on the employer side, the employer payroll cost calculator adds up the FICA match, FUTA, and SUTA for any wage. If you are self-employed, the math flips: you pay both halves of FICA yourself, as our comparison of self-employment tax vs. employee tax explains.

How to Check Your Own Take-Home Pay

The fastest way to confirm which taxes hit your wages is to read your pay stub line by line.

Find the FICA lines. Look for “SS” or “OASDI” and “Medicare” or “HI.” Together they should equal 7.65% of your gross pay (until you cross the $184,500 Social Security cap).
Find your income tax lines. Federal withholding is driven by your W-4. State and local tax lines appear only if your state and city levy them.
Look for a state unemployment or disability line. You will only see this in Alaska, New Jersey, Pennsylvania, and a handful of states with related disability or family-leave programs.
You will not see FUTA or standard SUTA. If your stub is missing an “unemployment tax” deduction, that is normal, your employer pays it separately.

Not sure how to decode the rest of your stub? Our walkthrough on how to read your pay stub covers every line. And to estimate your take-home pay before you even see the stub, download the Pay44 app or use the calculator to check any salary in any state.

Frequently Asked Questions

Do employees pay FUTA or SUTA taxes?

No. FUTA (federal unemployment tax) is paid entirely by employers, and in most states SUTA (state unemployment tax) is employer-only too. The three exceptions are Alaska, New Jersey, and Pennsylvania, where employees also contribute a small share of SUTA through payroll withholding.

What is the difference between FUTA and SUTA?

FUTA is the federal unemployment tax collected by the IRS on Form 940, and SUTA is the state unemployment tax collected by your state’s workforce agency. Both fund unemployment benefits and both are employer-paid, but SUTA rates and wage bases are set by each state and vary widely.

How much is the FUTA tax in 2026?

FUTA is 6.0% on the first $7,000 of each employee’s wages. Employers who pay their state unemployment tax on time get a credit of up to 5.4%, dropping the effective FUTA rate to 0.6%, or about $42 per employee per year.

Which payroll taxes come out of my paycheck?

Only FICA (Social Security and Medicare, totaling 7.65%) plus federal income tax withholding and any state or local income tax. FUTA and SUTA do not come out of your paycheck in most states, they are paid by your employer on top of your wages.

Do employers and employees both pay FICA?

Yes. Employees pay 7.65% of gross wages (6.2% Social Security plus 1.45% Medicare) and employers pay a matching 7.65%, for a combined 15.3%. Social Security applies only to the first $184,500 of wages in 2026, while Medicare has no cap.

The Social Security wage base for 2026 is $184,500, up from $176,100 in 2025. Both the employee and employer stop paying the 6.2% Social Security tax on wages above that amount for the year.

Why does SUTA differ so much from state to state?

Each state sets its own SUTA wage base and its own range of tax rates, then assigns each employer an experience rating based on how many former workers have claimed unemployment. A new employer pays a standard starting rate, while an employer with many claims pays more.

What does an employee actually cost an employer in payroll taxes?

On top of gross wages, an employer pays a 7.65% FICA match plus FUTA (about $42 per employee) and SUTA (a few hundred dollars, depending on the state). For a typical salaried worker, employer payroll taxes add roughly 8% to 10% above the stated salary.

References

IRS Topic No. 751 — Social Security and Medicare Withholding Rates: Official FICA rates, the $184,500 Social Security wage base, and Additional Medicare Tax thresholds for 2026.
IRS Topic No. 759 — Form 940, Employer’s Annual FUTA Tax Return: FUTA rate, the $7,000 wage base, the 5.4% state credit, and credit-reduction rules.
IRS — Questions and Answers for the Additional Medicare Tax: Thresholds and employer withholding rules for the 0.9% surcharge.
SSA — 2026 Cost-of-Living Adjustment (COLA) Fact Sheet: The 2026 Social Security wage base of $184,500.
U.S. DOL, Employment & Training Administration — Unemployment Insurance Tax Topic: How state unemployment taxes, wage bases, and experience rating work.

Frequently Asked Questions

Do employees pay FUTA or SUTA taxes?

What is the difference between FUTA and SUTA?

FUTA is the federal unemployment tax collected by the IRS on Form 940, and SUTA is the state unemployment tax collected by your state's workforce agency. Both fund unemployment benefits and both are employer-paid, but SUTA rates and wage bases are set by each state and vary widely.

How much is the FUTA tax in 2026?

FUTA is 6.0% on the first $7,000 of each employee's wages. Employers who pay their state unemployment tax on time get a credit of up to 5.4%, dropping the effective FUTA rate to 0.6%, or about $42 per employee per year.

Which payroll taxes come out of my paycheck?

Do employers and employees both pay FICA?

What is the Social Security wage base for 2026?

The Social Security wage base for 2026 is $184,500, up from $176,100 in 2025. Both the employee and employer stop paying the 6.2% Social Security tax on wages above that amount for the year.

Why does SUTA differ so much from state to state?

What does an employee actually cost an employer in payroll taxes?