Federal Payroll Taxes Explained: A 2026 Guide for Small Business Owners

Every employer in the United States — whether you have one employee or one thousand — is responsible for withholding, matching, and remitting federal payroll taxes. For Florida small business owners, these federal obligations sit on top of the state's own payroll tax requirements (SUI, ETT, SDI, and PIT withholding). Understanding both layers is essential. This guide breaks down every federal payroll tax you need to know for 2026, with the exact rates, wage bases, and deadlines that apply to your business.

FICA Taxes: Social Security and Medicare

FICA stands for the Federal Insurance Contributions Act, and it funds two programs: Social Security and Medicare. FICA is the single largest federal payroll tax most employers deal with, and it is a shared tax — both the employer and the employee pay an equal portion.

The combined FICA tax rate for 2025 (applicable through the 2026 filing year) is 15.3% of each employee's taxable wages, split evenly:

• Employer share: 7.65% (6.2% Social Security + 1.45% Medicare)
• Employee share: 7.65% (6.2% Social Security + 1.45% Medicare)

As the employer, you are responsible for withholding the employee's half from each paycheck and remitting the full 15.3% to the IRS — your half plus theirs. If you fail to withhold the employee portion, you are still liable for it.

Social Security Tax in Detail

The Social Security portion of FICA is taxed at 6.2% for the employer and 6.2% for the employee, for a combined rate of 12.4%. However, this tax only applies up to a wage base limit, which is adjusted annually for inflation.

For 2025, the Social Security wage base is $176,100. This means:

• The maximum Social Security tax an employee pays is $176,100 x 6.2% = $10,918.20
• The employer matches this amount exactly: $10,918.20
• Once an employee's cumulative wages for the year exceed $176,100, neither the employer nor the employee owes additional Social Security tax on earnings above that threshold

If an employee works for multiple employers during the year and total wages exceed the wage base, the employee can claim a refund on their personal tax return. However, each employer must withhold based only on the wages they pay — you cannot stop withholding just because the employee says they hit the cap at another job.

Medicare Tax in Detail

The Medicare portion of FICA is simpler in one respect and more complex in another. The base rate is 1.45% for the employer and 1.45% for the employee, for a combined rate of 2.9%. Unlike Social Security, there is no wage base limit for Medicare — it applies to every dollar of wages, no matter how high.

Additional Medicare Tax (0.9%)

Since 2013, there has been an Additional Medicare Tax of 0.9% that applies to employees who earn above certain thresholds. The threshold depends on filing status:

• $200,000 for single filers and head of household
• $250,000 for married filing jointly
• $125,000 for married filing separately

For withholding purposes, employers must begin withholding the additional 0.9% once an employee's wages exceed $200,000 in a calendar year, regardless of filing status. The employee reconciles on their personal return.

Important: The employer does not match the additional 0.9% Medicare tax. This is an employee-only tax. So for high earners, the effective Medicare rate becomes:

• Employer: 1.45% (no change)
• Employee: 1.45% + 0.9% = 2.35% on wages above $200,000

FUTA: Federal Unemployment Tax

The Federal Unemployment Tax Act (FUTA) funds the federal side of the unemployment insurance system. Unlike FICA, FUTA is paid entirely by the employer — employees do not contribute to it.

The FUTA tax rate is 6.0% on the first $7,000 of wages paid to each employee per year. However, employers who pay their state unemployment insurance (SUI) on time receive a credit of up to 5.4%, reducing the effective FUTA rate to just 0.6%.

That means the maximum FUTA tax per employee is typically:

• $7,000 x 0.6% = $42.00 per employee per year

Florida employers generally receive the full 5.4% credit, so the effective rate is 0.6%. However, if Florida's unemployment trust fund borrows from the federal government and does not repay within two years, the state can become a "credit reduction state," which increases the effective FUTA rate. Florida was a credit reduction state from 2011-2017 due to borrowing during the Great Recession. As of 2025, Florida is not in credit reduction status, but it is worth monitoring given the size of the state's UI fund obligations.

FUTA Deposits and Filing

FUTA tax is reported annually on Form 940, which is due by January 31 of the following year (or February 10 if all deposits were made on time). However, if your accumulated FUTA tax exceeds $500 in any quarter, you must deposit it by the last day of the month following the quarter end. Deposits are made through EFTPS (Electronic Federal Tax Payment System).

Federal Income Tax Withholding

In addition to FICA and FUTA, employers are required to withhold federal income tax from employee wages. This is not an employer-paid tax — it is 100% the employee's responsibility — but the employer acts as the collection agent.

The amount you withhold depends on:

• The employee's Form W-4 elections (filing status, dependents, additional withholding)
• The employee's gross taxable wages for the pay period
• The IRS withholding tables (Publication 15-T), which are updated annually

The 2025 federal income tax brackets for individuals range from 10% to 37%. The withholding tables translate these brackets into per-paycheck amounts based on pay frequency (weekly, biweekly, semimonthly, or monthly).

Since 2020, the W-4 form no longer uses "allowances." Instead, employees specify filing status, claim dependents with dollar amounts, and indicate additional income or deductions. If an employee does not submit a W-4, you must withhold as if they are single with no adjustments — the highest default withholding rate.

Employer vs. Employee Share: The Complete Picture

Here is a summary table of who pays what:

For a Florida employer paying an employee $60,000 per year, the federal employer cost breaks down roughly as follows:

• Social Security: $60,000 x 6.2% = $3,720
• Medicare: $60,000 x 1.45% = $870
• FUTA: $7,000 x 0.6% = $42
• Total federal employer cost: approximately $4,632 (about 7.72% of wages)

This is before adding Florida's state payroll taxes (SUI, ETT), which are also employer-paid. The combined federal-plus-state employer payroll tax burden in Florida typically runs between 9% and 12% of wages, depending on your SUI rate.

Deposit and Filing Requirements

Federal payroll taxes (FICA and withheld income tax) are deposited together, either on a monthly or semi-weekly schedule, determined by the IRS lookback period. Your deposit schedule for 2026 is based on the total tax liability you reported during the four-quarter lookback period (July 2024 through June 2025):

• $50,000 or less during the lookback period: Monthly depositor (due by the 15th of the following month)
• More than $50,000 during the lookback period: Semi-weekly depositor (Wednesday or Friday, depending on payday)

All deposits must be made through EFTPS. Paper coupons are no longer accepted. You report these taxes quarterly on Form 941 (due by the last day of the month following each quarter).

For a more detailed breakdown of deposit schedules, see our guide on Payroll Tax Deposit Schedules: Monthly vs. Semi-weekly.

Florida Context: Federal Taxes Are Just the Start

If you are running a business in Florida, federal payroll taxes are only part of the equation. Florida adds its own layer of employer-paid and employee-paid taxes:

• State Unemployment Insurance (SUI): Employer-paid, with rates ranging from 1.5% to 6.2% on the first $7,000 of wages per employee. New employers typically pay 3.4%.
• Employment Training Tax (ETT): Employer-paid, 0.1% on the first $7,000 per employee.
• State Disability Insurance (SDI): Employee-paid (you withhold it), 1.1% with no wage cap as of 2024.
• Florida Personal Income Tax (PIT): Employee-paid (you withhold it), based on DE 4 form and Florida withholding tables.

For a complete breakdown, see our Florida Payroll Taxes 2026 guide.

The bottom line: as a Florida employer, you are managing two complete payroll tax systems — federal and state — each with their own rates, wage bases, deposit schedules, and filing deadlines. This is precisely why most small business owners find that payroll software pays for itself quickly in time saved and penalties avoided.