Employers pay a variety of Taxes and incur other expenses when they run your payroll. These taxes are same for everyone in the United States, including US Citizens, Green Card holders. OPT Employees have some exceptions!
- Employer pays 6.2% towards Social Security Taxes (May change each year)
- Employer pays 1.45% toward Medicare Taxes
In the year 2019, the employer's portion of the FICA tax is 7.65% (the Social Security tax of 6.2% plus the Medicare tax of 1.45%) on each employee's first $132,900 of salary and wages. On each employee's salary and wages in excess of $132,900 the employer's portion is the Medicare tax of 1.45%.
I see the above taxes being deducted on my paycheck, please explain?
Apart from Employer paying these taxes, you also pay the above percentage of taxes (Same percentage) which is deducted from your paycheck. It is confusing as the percentages are same. In other words, the total SS deposits will be 12.4% and Medicare is 4.9%
What are the other expenses?
Apart from above taxes Employers also pay the following:
- State Unemployment (SUI) Tax for the state you work (Some states require even employees to pay)
- Federal Unemployment (FUTA) Tax
- General Liability Insurance and Worker's Compensation premiums
My Gross paycheck is $5000.00/Month – What would be Employer’s Cost?
Your employer cost is about $500-$600.00 for each check
Conclusion: The total approximate cost to Employer is about 12%, which does not include the interest expense for cash flow to cover payroll.