Glossary

Employer payroll taxes

The four taxes an employer owes on wages: Social Security, Medicare, federal unemployment, and state unemployment.

Social Security is charged at a fixed rate on wages up to an annual ceiling that the Social Security Administration resets each year. Medicare is charged at a fixed rate on every dollar with no ceiling. Federal unemployment tax carries a headline rate reduced by a large credit for paying the state on time, applied only to the first $7,000 of each worker's wages. State unemployment tax uses the state's own rate on the state's own taxable wage base, which varies enormously between states. Only Medicare applies to a whole salary; the rest stop at ceilings and are usually fully paid within the first months of the year.

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