How Much Are Payroll Taxes in GA for Employers?
Georgia employers: Understand your payroll tax obligations. Get clear insights into federal and state rates and their financial impact.
Payroll taxes are federal and state levies that support government programs. These taxes are calculated based on employee wages and fund initiatives such as Social Security, Medicare, and unemployment benefits. Employers are responsible for withholding amounts from employee paychecks and contributing their share. Understanding rates, wage bases, and reporting requirements is crucial for compliance and to avoid penalties.
Federal Social Security and Medicare Taxes
Federal payroll taxes include contributions to Social Security and Medicare, collectively known as Federal Insurance Contributions Act (FICA) taxes. These taxes are shared between employers and employees, with each party contributing a specific percentage of an employee’s wages. For 2024, the Social Security tax rate is 6.2% for both the employer and the employee. This tax applies to wages up to an annual wage base limit of $168,600 for 2024.
The Medicare tax rate for 2024 is 1.45% for both employers and employees, with no wage base limit. Employers are also required to withhold an additional Medicare tax of 0.9% from employee wages exceeding certain thresholds, such as $200,000 for single filers. This additional tax is solely the employee’s responsibility; employers do not match this portion.
For example, if an employee earns $5,000, the employer withholds $310 for Social Security ($5,000 x 6.2%) and $72.50 for Medicare ($5,000 x 1.45%) from gross pay. The employer contributes the same amounts. Once cumulative wages reach $168,600, Social Security tax is no longer withheld or matched for that year. Medicare tax, however, continues to apply to all subsequent earnings.
Federal Unemployment Tax (FUTA)
The Federal Unemployment Tax Act (FUTA) imposes a payroll tax on employers to help fund unemployment benefits for workers who lose their jobs. This tax is paid solely by employers and is not withheld from employee wages. The FUTA tax rate is 6.0% on the first $7,000 of wages paid to each employee annually. The maximum FUTA tax an employer pays per employee is $420 ($7,000 x 6.0%).
Employers receive a credit against their FUTA tax liability for timely contributions to state unemployment insurance programs. This standard credit can be up to 5.4% of taxable wages, effectively reducing the FUTA tax rate to 0.6%. If a state has outstanding federal unemployment loans, the FUTA credit for employers in that state may be reduced, leading to a higher effective FUTA tax rate.
Georgia State Unemployment Tax (SUTA)
In Georgia, employers are also subject to State Unemployment Tax Act (SUTA) contributions, which fund the state’s unemployment insurance program. Unlike federal unemployment tax, Georgia’s SUTA rates are experience-rated, meaning they vary for each employer based on their history of unemployment claims. A higher number of former employees filing unemployment claims can lead to a higher SUTA tax rate for an employer. The SUTA taxable wage base in Georgia for 2024 is $9,500 per employee.
New employers in Georgia are assigned a standard initial SUTA rate before they establish an experience rating. For 2024, the new employer rate in Georgia is 2.64%, which includes an administrative assessment of 0.06%. Established employers will see their SUTA rates range from a minimum of 0.04% to a maximum of 8.10% in Georgia for 2024, also including the administrative assessment. The specific rate an employer pays is communicated annually by the Georgia Department of Labor.
Georgia State Income Tax Withholding
Employers in Georgia have a responsibility to withhold state income tax from their employees’ wages. While this is not a direct tax on the employer, it is a crucial part of an employer’s payroll obligations to collect and remit these funds to the Georgia Department of Revenue. The amount of state income tax withheld depends on the employee’s earnings and the information they provide on Georgia Form G-4, Employee’s Withholding Allowance Certificate. Employees complete this form to indicate their filing status and the number of allowances they claim, which directly impacts the amount of tax withheld.
For 2024, Georgia simplified its income tax structure to a flat rate of 5.49%. Employers utilize withholding tables or calculation methods provided by the Georgia Department of Revenue to accurately determine the state income tax amount to be withheld from each paycheck. The timely and accurate withholding and remittance of these taxes are essential for employers to remain compliant with state tax laws.