Last updated: October 2026

2026 Payroll Tax Rates: Federal Rates, Wage Bases, and Thresholds

2026 payroll tax rates start with one change: the Social Security wage base rose to $184,500. That is $8,400 more than the 2025 base of $176,100. For 2026, the most an employee pays in Social Security tax is $11,439, and the employer pays a matching $11,439.

For 2027 payroll, see the 2027 payroll tax rates.

How 2026 Payroll Tax Rates Compare to Last Year

The 2026 Social Security tax rate holds at 6.2% for employers and 6.2% for employees. The 2026 Medicare tax rate holds at 1.45% each for the employee and the employer. The additional Medicare tax remains at 0.9% on individual wages above $200,000. The 2026 FUTA rate stays at 6.0% on the first $7,000 per employee, with the standard 5.4% credit reducing the effective rate to 0.6%.

The percentages held for 2026; the wage base rose.

The wage base changes each year with the national average wage index. A worker earning $184,500 or more in 2026 pays $520.80 more in Social Security tax than the same worker paid in 2025. Their employer matches that amount. For a company with 50 high-earning employees, the annual increase totals $26,040 in additional employer payroll taxes.

There are no payroll tax brackets in the traditional sense for 2026. Social Security is a flat 6.2% from dollar one through the cap. Medicare is a flat 1.45% on everything. Social Security stops at $184,500; the additional 0.9% starts at $200,000. Income tax uses graduated brackets; payroll tax uses flat rates with thresholds.

The tradeoff of a rising wage base: employees pay more into Social Security now but accrue higher benefits at retirement. Employers see only the cost side of that equation.

FICA Rates 2026: The Employer and Employee Split

The federal payroll tax rates for 2026 combine to 15.3% on every dollar up to $184,500, then drop to 2.9% above it. The employee and the employer each owe 7.65% on wages under the cap.

Pretax 401(k) contributions reduce federal income tax withholding but do not reduce FICA. The exception: contributions routed through a Section 125 cafeteria plan, including health insurance premiums, FSAs, and HSAs offered under a cafeteria plan, do reduce FICA-taxable wages. The tradeoff is real. Lower FICA wages mean lower Social Security benefit accrual at retirement.

Once an employee's year-to-date wages cross the 2026 base of $184,500, the employer stops withholding the 6.2% Social Security tax on additional earnings. Medicare has no wage ceiling and applies to every dollar. If your payroll system tracks the wage base incorrectly, you either over-withhold (requiring a refund) or under-withhold (owing the IRS the difference).

The Additional Medicare Tax Thresholds

The additional Medicare tax is 0.9% on wages above $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for everyone else. Only the employee pays it. The employer has no matching obligation. The additional Medicare tax took effect in 2013.

An employer must begin withholding the extra 0.9% once an employee's wages pass $200,000 in a calendar year. The IRS says employers withhold it without regard to the employee's filing status or wages paid by another employer.

Married couples filing jointly do not owe the additional Medicare tax until combined wages exceed $250,000. But each spouse's employer withholds at the $200,000 individual threshold. The result is a year-end reconciliation on the couple's Form 1040.

FUTA Looks Small Until Credit Reductions Hit

The 2026 FUTA rate is 6.0% on the first $7,000 per employee. With the standard 5.4% credit, employers pay an effective 0.6%, or $42 per employee per year. At 50 employees, that is $2,100 annually.

Under 26 U.S.C. 3302(c)(2) and (d)(3), the credit shrinks when a state owes federal unemployment advances on a second consecutive January 1 and on November 10 that year. It drops by 5% of the FUTA tax that year, which is 5% times 6.0%, or 0.3% of wages. It drops by an additional 5% for each later year the balance remains. The Department of Labor lists credit reductions for California employers in 2022 through 2025 and for New York employers in 2022 through 2024. For 2025, the California credit reduction was 1.2%, so a California employer paid 0.6% plus 1.2%, or 1.8%, of $7,000, which is $126 per employee.

Employers keep the full 5.4% credit if they paid state unemployment tax in full, on time and on the same wages subject to FUTA. Their state also must not be a credit reduction state. IRS Publication 15 for 2026 points to the Instructions for Form 940 to figure the credit. Employers figure any credit reduction on Schedule A (Form 940).

Self-Employment Tax Rate 2026: The Employee and Employer Shares

Self-employed individuals pay the employer and employee shares combined. The self-employment tax rate for 2026 is 15.3% on net self-employment earnings up to $184,500, then 2.9% above it.

The IRS allows a deduction for the employer-equivalent portion: 50% of the self-employment tax is deductible on Form 1040. That deduction reduces income tax but does not reduce self-employment tax itself.

S corporation owners who work in the business are paid wages subject to FICA; distributions are not wages.

A sole proprietor owes SE tax on 92.35% of net profit (Schedule SE).

Lock In Your 2026 Withholding Before the Next Filing Deadline

Form 941 is due by the last day of the month after each quarter: April 30, July 31, October 31 and January 31. If your payroll system still uses the 2025 base of $176,100, it stops Social Security withholding too early for employees who earn more than that.

Confirm your payroll software reflects the 2026 Social Security wage base of $184,500 and verify the additional Medicare tax triggers at $200,000 per employee. Pull a year-to-date payroll tax report and compare it to the 2026 FICA rates on this page. If any number is off, correct it before your next pay run.

Some states add their own payroll taxes beyond income tax withholding and SUTA. For employers in high-SUTA states, combine this review with a check of your state unemployment rate notice. For workers earning overtime, verify that regular rate calculations feed into FICA correctly when nondiscretionary bonuses apply. If you run payroll by hand, compare a missed deposit penalty against the $49 per month plus $6 per employee that a service like Gusto or OnPay charges. Both published that price in September 2026.

Browse our payroll provider reviews to find the right fit, or start with the guide on how to set up payroll if you are switching for the first time. The payroll tax hub lists the federal filing guides.

This is not legal or financial advice. Consult a qualified professional for your specific situation.