United States payroll guide · 2026-08-31
Running payroll in the United States means staying current with a set of federal requirements that shift every year. In 2026, the Social Security wage base went up again, deposit deadlines remain unforgiving, and the IRS's penalty schedule starts at the moment a deposit is even one day late. Whether you're managing payroll for five employees or five hundred, the fundamentals are the same — and the cost of getting them wrong is real.
Social Security (OASDI)
Both employees and employers contribute 6.2% on wages up to the Social Security wage base. For 2026, that base is $184,500 — up from $176,100 in 2025, a 4.8% increase. Once an employee's cumulative wages pass that threshold in the calendar year, Social Security tax stops on both sides.
Medicare (HI)
Medicare applies to all wages with no cap, at 1.45% for both employee and employer. High earners face an additional wrinkle: wages over $200,000 per employee trigger an Additional Medicare Tax of 0.9%, which the employer must withhold — even though only the employee owes it.
FUTA (Federal Unemployment Tax)
Employers pay FUTA at 6.0% on the first $7,000 of each employee's wages. In practice, most employers qualify for the maximum 5.4% state unemployment credit, bringing the effective federal rate to 0.6% — a maximum of $42 per employee annually. That credit is contingent on paying state unemployment contributions on time; late state payments can reduce or eliminate it.
Form 941 — the Employer's Quarterly Federal Tax Return — must be filed four times a year. For 2026, the due dates are:
If you've made timely deposits covering all taxes owed for a quarter, you get a 10-day extension on the filing itself. But that extension only applies to the return — not to any deposit that was already late.
Most small employers use the monthly deposit schedule: taxes accumulated in one month are due by the 15th of the following month. Larger employers (those who reported more than $50,000 in payroll taxes in the prior lookback period) follow the semi-weekly schedule, where taxes withheld on Wednesday–Friday are due the following Wednesday, and taxes withheld Saturday–Tuesday are due the following Friday.
The IRS determines your deposit schedule based on your lookback period — the 12-month window ending June 30 of the prior year. If you crossed the $50,000 threshold during 2025, you may already be on the semi-weekly schedule in 2026 without realizing it.
The IRS separates deposit penalties from filing penalties. A business can file Form 941 on the due date and still owe deposit penalties if the underlying tax was deposited late. Penalties start at 2% for deposits 1–5 days late, step up to 5% for 6–15 days late, reach 10% after 15 days, and climb to 15% if the IRS issues a notice before payment. These stack up quickly on a large payroll.
Many small-business payroll setups don't automatically flag the $200,000 per-employee threshold. If an employee crosses it mid-year and the extra 0.9% isn't withheld, the employer is liable for the under-withholding — even though it's technically the employee's tax.
Treating an employee as an independent contractor avoids payroll taxes in the short term but creates substantial exposure: back taxes, interest, and penalties for every quarter the worker was misclassified. The IRS and Department of Labor apply a multi-factor test, and "we had a 1099 agreement" is not a defense.
Federal payroll tax is only part of the picture. Most states have their own income tax withholding requirements, state unemployment insurance (SUTA), and in some cases local wage taxes (New York City, Philadelphia, and others). A payroll system that handles only federal obligations leaves employers exposed on multiple fronts.
The IRS matches Form 941 filings to the deposit records on file. Discrepancies — even rounding errors — trigger CP notices that take hours to resolve. Running a reconciliation before each quarter's filing catches most issues before they become notices.
Date — Action
September 15 — Monthly deposit due for August wages
October 15 — Monthly deposit due for September wages
November 2 — Form 941 due for Q3 (Oct 31 shifted)
November 16 — Monthly deposit due for October wages
December 15 — Monthly deposit due for November wages
January 15, 2027 — Monthly deposit due for December wages
February 2, 2027 — Form 941 due for Q4 (Jan 31 shifted)
January 31, 2027 — W-2s must be furnished to employees
US payroll compliance is manageable — but it requires accurate employee data, a clear view of each worker's cumulative wages, and a deposit schedule that doesn't slip. The penalties for late deposits are automatic, applied by system before a human ever reviews the account.
PayTime supports US payroll with built-in FICA calculations (including the Additional Medicare Tax threshold), quarterly 941 reporting, and deposit schedule tracking. If you're running payroll manually or outgrowing your current system, a free trial takes about five minutes to start.