Most payroll taxes apply to all earnings, however there are some taxes that are capped based upon the requirements of the governing agency.
FICA – Federal Insurance Contributions Act tax
Consists of Social Security and Medicare taxes
Must be paid by employee and matched by employer
Capped based upon annual determination
Income Tax
Federal Tax withheld based upon Circular E table
State Income Tax withheld based upon individual state rules
Certain States are exempt from State Income tax (AK, FL, NV,TN, TX, SD, WY, and WA)
Local Income Taxes apply to programs in certain areas for the benefit of cities, counties, school districts and other local needs
FUTA – Federal Unemployment Tax Act
Paid by employer
Provides compensation for workers who have lost their job
This is generally a capped tax
SUI – State Unemployment Insurance
Usually paid by employer
Tax rate fluctuates on an business by business basis
Generally Capped
Other Taxes
Some states administer disability insurance or workers compensation insurance as a tax that must be accounted for through payroll.
