The Federal Payroll Tax Chart is Always Changing
The old saying that death and taxes are the two things that everyone must experience in life is true. But while death stays the same in nature, the tax rate is always changing. The Federal Payroll Tax Chart is modified every year so it conforms to new tax laws that have been put in place or old tax laws that have been modified.
Payroll taxes are mandatory, but the amount of taxes withheld changes based on the amount of money earned and the number of exemptions claimed by an individual. A Payroll Tax Chart gives employers the amount that should be deducted from the gross pay of each individual. That amount is sent to the Internal Revenue Service quarterly.
Employers are also responsible for paying some payroll taxes for each employee. A good Federal Payroll Tax Chart breaks down how much is owed so an accurate amount can be sent in each quarter. There is new payroll tax chart software on the market that helps small business owners calculate employee payroll taxes as well as employer payroll taxes, but some business owners still like to figure payroll taxes using the old method.
The Payroll Tax Chart is Divided by Filing Status and Amount Earned
The figures may change each year, but the format of the payroll tax chart stays the same. The chart is divided into sections for easy reference. The first section is based on pay period frequency and the second is based on filing status. The payroll chart lists a bi-weekly and monthly deduction for single and married filers.
The amount of the tax is based on income for that pay period. There are nine columns that give the basic amounts earned. A percentage of that amount is taxed at a rate of 10% to 35% based on the amount over the minimum for that column. A bi-weekly amount of $1300 is taxed at a 10% rate, and an individual that earns over $5,000 is taxed at 35% rate over the minimum amount.
The payroll tax chart also lists Social Security and Medicare (FICA) deductions. The Social Security wage base is $113,700 but there is no base for Medicare. That means the deduction for Social Security stops at $113,700, but the Medicare deduction continues regardless of the amount earned. The FICA tax rate is 7.65% for employers as well as employees. Social Security gets 6.2% of that amount, and Medicare gets 1.45%.