What payroll taxes does my trucking company have to pay as an employer?
Trucking companies have to pay taxes in a variety of manners to many government entities. There’s IRP, IFTA, HHUT, Weight distance taxes in KY, NY, OR and NM. That’s not counting excise tax, or tolls which are really a tax on road usage and possible sales tax in your state. And then if you make money, you may have income tax too. But what about payroll taxes? What does a trucking company pay in payroll taxes for employing someone? In this article we examine the required payroll taxes. This is not an exhaustive list as some localities may add other taxes but it should serve as a guide.
If you want a working number as a percentage of wage, use 10% to start and narrow it down from there. If you want to lower your payroll taxes (and who doesn’t?)check out this article on paying per diem. The lower wage amounts as a result of per diem will lower your payroll taxes too!
FICA Taxes
What is it?
FICA stands for the Federal Insurance Contributions Act. The FICA tax consists of both Social Security and Medicare taxes. Social Security and Medicare taxes fund the retirement benefits U.S. workers enjoy during retirement.
Does the employee pay this also?
FICA taxes are paid both by the employer and the employee. Each party pays half of these taxes. Both halves of the FICA taxes add up to a total of 15.3%, broken down as follows:
- Social Security employee contribution: 6.2% of first $137,700 in wages (2020) $142,800 in2021
- Social Security employer contribution: 6.2% of first $137,700 in wages (2020) $142,800 in 2021
- Medicare employee contribution: 1.45%
- Medicare employer contribution: 1.45%
How much do I have to pay?
Employers pay 6.2% of an employee’s gross pay toward Social Security until the employee earns $137,700 for the year. The remaining 1.45% goes toward Medicare with no limit.
When do I have to pay it?
There are two deposit schedules, monthly and semi-weekly. Before the beginning of each calendar year, you must determine which of the two deposit schedules you are required to use.
Federal Unemployment (FUTA) Tax
What is it?
It’s one of the many federal payroll taxes. It funds the administrative costs of each state’s & territory’s unemployment benefits programs. Employers report and pay FUTA tax separately from social security, Federal Income tax, and Medicare taxes.
Does the employee pay this also?
FUTA, unlike SUTA, is only paid by the employer, employees do not pay this tax or have it withheld from their pay.
How much do I have to pay?
FUTA, unlike SUTA, the tax rate is static: For all U.S. businesses, you pay 6% on an employee’s taxable wages, up to $7,000 of eligible income per employee.
When your business pays SUTA taxes on time and files IRS Form 940, you might qualify for a 5.4% tax credit, reducing your effective FUTA rate to 0.006%.
When do I have to pay it?
FUTA taxes are paid to the IRS one month after the quarter in which your business owes $500 or more, or on January 31 of the following year, whichever comes first.
State unemployment taxes (SUTA)
What is it?
SUTA funds a majority of most unemployment benefit programs. Administered at the state and territorial level, these programs can provide temporary compensation to people who have lost their jobs through no fault of their own.
Does the employee pay this also?
Only employers pay SUTA taxes, except in Alaska, New Jersey, and Pennsylvania. Employees have to contribute in those states.
How much do I have to pay?
SUTA taxes, like many other taxes, have a wage base: You as the employer stop paying SUTA on your employees’ wages after they earn a certain amount for the year. For example, once a Pennsylvania employee earns $10,000 in taxable wages, you no longer pay SUTA tax for that person.
When do I have to pay for it?
States manage SUTA tax collection, so check with your state labor department or tax software to see when your SUTA taxes are due and if there are any unique tax rules.
Have more questions on employer tax? Check out these other articles.
Written by Melisa Bush
With over 15 years of experience working with and for trucking companies, Melisa has no problem understanding the complications that come with trucking payroll and with navigating special circumstances. Before coming to Superior Trucking Payroll Service, in 2011, Melisa worked for a trucking company with 50 trucks. She was the one who processed the driver’s miles and expenses.
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