Employer vs employee payroll taxes: who actually pays what

One of the most persistent payroll misunderstandings is thinking payroll tax is one thing that comes out of a paycheck. It isn’t. Some payroll taxes are the employee’s, withheld from their pay; others are the employer’s, paid on top of wages and never seen on the stub.

Taxes the employee pays (withheld)

• Federal income tax — based on their W-4; their tax, the employer just withholds and remits it.
• The employee share of FICA — Social Security and Medicare, split with the employer.
• State and local income tax, where applicable.

The employer isn’t paying these — it’s collecting them on the government’s behalf and passing them on.

Taxes the employer pays (on top)

• The employer share of FICA — the employer matches the employee’s Social Security and Medicare. A real cost the employee never sees.
• FUTA and SUTA — federal and state unemployment tax, generally employer-paid.

The ones that vary

A few states flip the pattern — funding unemployment or disability partly through employee contributions. So the split isn’t identical everywhere, which matters for a multi-state employer.

Why it shapes the real cost of an employee

Add the employer’s FICA match, FUTA and SUTA on top of gross wages, and the true cost of employing someone is meaningfully more than their salary — before benefits. It’s also why the employer’s payroll-tax liability is tracked separately from what was withheld.