How Much Are Payroll Taxes in Florida?

Payroll taxes are mandatory contributions levied on wages and salaries. They fund social insurance programs like retirement income, healthcare, and unemployment assistance. Both employers and employees contribute to these programs, supporting economic stability.

Federal Payroll Tax Obligations

Federal payroll taxes, primarily under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA), apply to employers and employees. FICA taxes fund Social Security and Medicare. For 2025, the Social Security tax rate is 6.2% for both the employee and employer, totaling 12.4% on wages up to a limit. The 2025 Social Security taxable wage base is $176,100; earnings above this amount are not taxed.

The Medicare tax rate is 1.45% for both the employee and the employer, making a combined rate of 2.9%. There is no wage base limit for Medicare tax, so all covered wages are subject to this tax. An Additional Medicare Tax of 0.9% applies to an employee’s wages exceeding $200,000 in a calendar year, with employers responsible for withholding this amount. This additional tax does not have an employer-matching contribution.

The Federal Unemployment Tax Act (FUTA) imposes a tax on employers to fund unemployment compensation programs. The standard FUTA tax rate is 6.0% on the first $7,000 of each employee’s annual wages. Employers can receive a credit of up to 5.4% against the FUTA tax for timely payments to state unemployment funds, effectively reducing their net FUTA rate to 0.6%.

Florida Reemployment Tax

Florida imposes its state-level unemployment tax, known as the Reemployment Tax, solely on employers. This tax contributes to the state’s Unemployment Compensation Trust Fund, which provides benefits to eligible workers who lose their jobs. The tax is applied to the first $7,000 of wages paid to each employee in a calendar year.

New employers in Florida are assigned an initial Reemployment Tax rate of 2.7%. This rate remains in effect for the first 10 quarters of operation. After this initial period, an employer’s rate is determined by an experience rating system, which considers factors such as their unemployment claims history and taxable payroll. The Reemployment Tax rate in Florida can range from a minimum of 0.1% to a maximum of 5.4%.

Understanding Taxable Wages

The concept of “taxable wages” forms the basis for calculating payroll taxes. Gross wages encompass all compensation paid to an employee, including salary, hourly pay, and tips. However, certain deductions or types of compensation can influence what portion of these gross wages is considered taxable for specific payroll tax purposes.

Pre-tax deductions, such as contributions to a traditional 401(k) retirement plan or health insurance premiums, reduce an employee’s taxable income for federal and state income tax purposes. While these deductions lower income tax liability, employee contributions to 401(k) plans are still subject to Social Security and Medicare (FICA) taxes. Employer-sponsored health insurance premiums are not subject to FICA taxes for either the employer or employee. Similarly, pre-tax deductions reduce the wage base for Federal Unemployment Tax (FUTA) and state unemployment insurance taxes.