2026 Payroll Tax Rates: FICA, FUTA, and Withholding Rules

Payroll tax rates for 2026 hold steady at the familiar federal levels: 6.2% Social Security on wages up to $184,500, 1.45% Medicare on all wages, matching employer shares on both, a 0.9% Additional Medicare Tax on high earners, and the same seven federal income tax brackets that have been in place since 2018. The Social Security wage base is the main figure that moved, up from $176,100 in 2025. Federal income tax brackets did not revert to pre-2018 rates because the One Big Beautiful Bill Act made the lower rates permanent.¹

Social Security Tax and the 2026 Wage Base

Employees pay 6.2% of wages toward Social Security, and employers pay a matching 6.2%, for a combined 12.4%.²³ The tax applies only up to the annual wage base, which for 2026 is $184,500.⁴ Once year-to-date wages cross that line, the 6.2% withholding stops for the rest of the calendar year.

The cap rose from $176,100 in 2025, adding $8,400 of earnings subject to the tax. The maximum an employee can pay in Social Security tax in 2026 is $11,439 (6.2% of $184,500). The Social Security Administration recalculates the base each October against a national wage index.⁴

Medicare Tax and the Additional Medicare Tax

Medicare has no earnings cap. Employees and employers each pay 1.45% on all wages, no matter how high.²³ Higher earners owe an extra 0.9% Additional Medicare Tax on wages above filing-status thresholds:

Single filers: $200,000
Married filing jointly: $250,000
Married filing separately: $125,000

Employers withhold the extra 0.9% once an employee’s wages cross $200,000 in the calendar year, regardless of the employee’s actual filing status.⁵ A married couple filing jointly with combined wages under $250,000 might see too much withheld if one spouse crosses $200,000 alone; they reconcile it on the return. Employers owe no matching share of the 0.9% surtax.⁶

Federal Income Tax Withholding

The seven bracket rates remain 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The IRS adjusted the threshold amounts for inflation. For single filers, the 12% bracket runs from $12,401 to $50,400, and the 37% rate begins above $640,600. For married couples filing jointly, the 37% bracket starts above $768,700. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.¹

Employers calculate withholding using IRS tables and formulas updated each year.⁷ The employee’s Form W-4 tells the employer which filing status to apply and whether to account for multiple jobs, dependents, or other adjustments.⁸ If your circumstances have changed since you last filed a W-4, submitting an updated one keeps withholding accurate.

Withholding on Bonuses and Other Supplemental Wages

Bonuses, commissions, overtime, and other supplemental wages can be withheld in one of two ways. Employers may combine the supplemental payment with regular wages and withhold at the normal graduated rate, or apply a flat 22% federal income tax rate to the supplemental amount.⁹ Most payroll systems default to the flat method.

If supplemental wages paid to a single employee exceed $1 million in a calendar year, the excess above $1 million is withheld at 37%, matching the top individual rate.⁹ Social Security and Medicare taxes apply to supplemental wages under the same rules as regular pay, including the $184,500 Social Security cap.

Self-Employment Tax

Self-employed workers pay both halves of FICA: 12.4% Social Security on net self-employment income up to $184,500, plus 2.9% Medicare on all net self-employment income.⁴ The combined self-employment tax rate is 15.3% below the Social Security cap.

The 0.9% Additional Medicare Tax also applies to self-employment earnings above the same filing-status thresholds that apply to employees.¹⁰ Self-employed filers can deduct half of the self-employment tax (the employer-equivalent portion) in figuring adjusted gross income. None of the 0.9% surtax is deductible.

Self-employment tax is paid through quarterly estimated tax payments rather than payroll withholding. Missing a quarterly deadline can trigger underpayment penalties.

Federal Unemployment Tax (FUTA)

FUTA is an employer-only tax. The statutory rate is 6.0% on the first $7,000 of wages paid to each employee per year.¹¹ Employers who pay state unemployment taxes on time generally qualify for a 5.4% credit, dropping the effective federal rate to 0.6%, or a maximum of $42 per employee per year.¹²

Employers in states with outstanding federal unemployment loans may face a credit reduction that raises the effective FUTA rate. The Department of Labor publishes the list of affected states each November. FUTA is reported annually on Form 940, though deposits may be required quarterly if liability exceeds $500.¹³

New State Paid Leave Payroll Taxes in 2026

Several state paid family and medical leave programs are new for 2026 and add payroll obligations separate from federal taxes. Minnesota began collecting premiums and paying benefits simultaneously in January 2026, with the cost shared between workers and employers. Delaware started paying benefits in January 2026 after a year of collecting premiums. Maine began paying benefits in May 2026, with premiums having started in 2025. These join existing programs in states including California, New York, and Washington. State unemployment insurance taxes remain entirely separate from FICA and FUTA and vary widely in wage base and rate structure.

Household Employer Rules

Household employers follow a different set of thresholds. If you pay a nanny, housekeeper, or other household worker $3,000 or more in cash wages during 2026, you owe the employer’s 6.2% Social Security and 1.45% Medicare share, and you must either withhold the employee’s matching share from their pay or cover it yourself.¹⁴

Household employers do not file Form 941. They report Social Security, Medicare, and any withheld income tax on Schedule H attached to their Form 1040. If you pay household employees $1,000 or more in cash wages in any calendar quarter, FUTA applies to the first $7,000 per worker. Household employers must also issue a W-2 to each employee by the filing deadline.

Deposit and Filing Deadlines

All federal employment tax deposits must be made electronically.¹⁵ The IRS accepts payments through the Electronic Federal Tax Payment System (EFTPS), IRS Direct Pay, and a business tax account on IRS.gov. ACH credit and same-day wire transfers through your bank are also permitted, though the bank may charge a fee.

Most employers file Form 941 each quarter to report wages, federal income tax withheld, and both shares of Social Security and Medicare taxes.¹⁶ The return is due the last day of the month following each quarter: April 30, July 31, October 31, and January 31.¹⁷ Employers who have deposited all taxes on time get ten additional calendar days to file.

FUTA is reported annually on Form 940.¹³ W-2 forms for the 2026 tax year must be furnished to employees and filed with the Social Security Administration by February 1, 2027.¹⁸

Penalties for Late Deposits

Missed deposits trigger tiered penalties based on how late the payment is:¹⁹

1 to 5 days late: 2% of the unpaid deposit
6 to 15 days late: 5% of the unpaid deposit
More than 15 days late: 10% of the unpaid deposit
More than 10 days after the first IRS notice: 15% of the unpaid deposit

The tiers do not stack. A deposit 20 days late draws a 10% penalty, not 2% plus 5% plus 10%. The 15% level applies only after the IRS sends a delinquency notice and payment still isn’t made.²⁰ Separate penalties apply for filing returns late and for failing to furnish W-2s on time.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One Big Beautiful Bill
2
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
3
Office of the Law Revision Counsel. 26 U.S. Code 3111 – Rate of Tax
4
Social Security Administration. Contribution and Benefit Base
5
eCFR. 26 CFR 31.3102-4 – Special Rules Regarding Additional Medicare Tax
6
Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
7
Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source
8
Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate
9
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
10
Office of the Law Revision Counsel. 26 U.S. Code 3101 – Rate of Tax
11
Office of the Law Revision Counsel. 26 USC Ch. 23 – Federal Unemployment Tax Act
12
Internal Revenue Service. Topic No. 759, Form 940, Employer’s Annual Federal Unemployment Tax Return
13
Internal Revenue Service. About Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
14
Internal Revenue Service. Publication 926, Household Employer’s Tax Guide (2026)
15
Internal Revenue Service. Depositing and Reporting Employment Taxes
16
Internal Revenue Service. About Form 941, Employer’s Quarterly Federal Tax Return
17
Internal Revenue Service. Topic No. 758, Form 941, Employer’s Quarterly Federal Tax Return
18
Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
19
Internal Revenue Service. Failure to Deposit Penalty
20
Office of the Law Revision Counsel. 26 USC 6656 – Failure to Make Deposit of Taxes