Last updated: August 2026

Payroll Tax Rates, Penalties & State Guides

Payroll tax mistakes are expensive and compounding. The IRS charges penalties plus interest, and most employers don’t realize they’re overpaying until an audit forces the math. Employers with nonresident remote workers should also review the convenience of the employer rule, which can source home office days to the employer’s state.

Rates and what employers owe

• 2026 payroll tax rates the federal rate tables, wage bases, and thresholds in one place
• Payroll tax vs income tax which burden falls on the employee and which falls on the employer
• Supplemental wages withholding flat versus aggregate withholding on bonuses and other supplemental pay
• Severance pay why it counts as taxable wages and how Section 409A reaches the final check
• FSA limits contribution caps for health and dependent care accounts

Federal forms and filings

• Form 941 the quarterly return, its deposit deadlines, and 941-X corrections
• Form 945 annual reporting on nonpayroll withholding and backup withholding triggers
• Form 843 how employers claim penalty abatement and recover overpaid FICA
• FICA overcollection recovering excess Social Security tax withheld across two employers
• The common paymaster rule the election that stops related companies double paying on a shared worker
• Officer compensation why S corp owner pay belongs on a W-2 and what draws a reasonable compensation audit

Penalties and internal controls

• Payroll tax penalties how late deposit and late filing penalties stack, and where personal liability starts
• Underpayment penalty rules the penalty tiers, the safe harbors, and the abatement paths
• Trust fund recovery penalty how unpaid payroll taxes become a personal debt under IRC 6672
• The payroll clearing account an internal control that surfaces miscoded net pay and tax entries
• Payroll journal entry the debit and credit lines for wages, withholdings, and employer taxes