This guide explains how to calculate FICA, FUTA, and other payroll taxes in QuickBooks for 2025. You’ll learn step-by-step calculations for Social Security, Medicare, and unemployment taxes, plus how to set up QuickBooks Payroll to automate tax withholding and remittance.
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As an important part of the tax filing procedure, scroll further to learn more about payroll taxes and how to calculate and set them up on QuickBooks.
What are Payroll Taxes?
The salaries, commissions, tips, or wages, which a working professional makes, few taxes are levied on such earnings and thus are further known as Payroll taxes. The process of levying these taxes happens via the employers who levy the amount from their respective paychecks and then pay to the government.
These payroll taxes are collected by the Government to sponsor various social insurance programs like Medicare and Social Security.
Generally, payroll taxes are confused with federal payroll taxes that are associated with state income taxes and federal taxes. However, the main differentiating factor between these two taxes is that the payroll taxes are levied or collected for funding few focused social programs.
On the other hand, state income taxes and federal taxes are submitted for U.S. Treasury’s general funds. Also, every working professional has to pay a flat payroll tax rate as opposed to the income taxes which depend on employee’s earnings.
There are two types of payroll taxes that are levied from you directly:
FICA TAX (Federal Insurance Contributions Act)
Standing for Federal Insurance Contributions Act, it is known for covering social security and Medicare and is shared by both the employee and the employer. The portion which is covered by the employer is 1.45% for Medicare and 6.2% for social security. The same amount is to be remitted and collected from the employees.
FUTA TAX (Federal Unemployment Tax Act)
Standing for Federal Unemployment Tax Act, it is known for covering unemployment insurance. The overall amount allocated for this tax is 6%. Although, few states might have a credit of 5.4% which means the majority portion of the employers will pay only 0.6%.
Other than the ones mentioned above, the payroll taxes which are to be just collected and remitted are:
- SECA Tax (Self-Employed Contributions Act)
- SUCA Tax (State Unemployment Tax Act)
- Federal Income Taxes
- State and Local Taxes
Calculating multi-state taxes can become complex if the system is tracking locations you no longer use. Learn how to remove a state from your payroll profile to simplify your quarterly tax calculations.
Why do You Need to Calculate Payroll Taxes in QuickBooks?
When you enter payroll data and transactions in QuickBooks, the tax calculations and payroll wage are derived respectively. Thus, before the tax filing season kicks in, you need to ensure that the employees’ payroll data is up-to-date.
If you want that the application to properly calculate the tax amounts and correct wages, verification of employees and payroll items must be checked properly.
Advisably, try having a practice in place to run payroll reports at regular intervals.
How to Calculate Payroll Taxes?
Let’s first get started with calculating FICA Payroll Tax; Under FICA, the tax levying events are Social Security withholding and Medicare.
Note: Social Security tax applies only to wages up to the annual wage base limit ($168,600 in 2024; check IRS.gov for 2025). Wages above this threshold are exempt.’ In FUTA, add: ‘Employers in credit reduction states (e.g., California, New York—verify current list at DOL.gov) pay a higher effective FUTA rate.
FICA Tax Calculation
For calculating Social Security withholding, you need to start with multiplying the gross pay of your employee for the current pay period with the For 2025, the Social Security tax rate is 6.2% (as per IRS guidelines, subject to annual review)’ and ‘1.45%’ → ‘1.45% for 2025’.
The amount must be deducted from the employee’s paycheck and remitted with the payroll taxes.
For eg,
- Identify gross pay for the pay period (e.g., $1,500).
- Multiply by 6.2% (Social Security rate): $1,500 × 0.062 = $93.00.
- Deduct $93.00 from employee paycheck.’ Repeat for Medicare (1.45%) and FUTA (0.6%).
For calculating Medicare withholding, you need to start with multiplying the gross pay of your employee for the current pay period with the latest ongoing rate of 1.45% for Medicare tax rate.
For eg,
Gross Pay = $5,000
Current Medicare Tax Rate = 1.45%
The Amount Payable for the Medicare Deduction = $72.50
FUTA Tax Calculation
As mentioned earlier, the FUTA tax rate is 6%, and the approx. tax rate, which the employers ultimately pay, is 0.6% because each state receiving credit for covering the remaining portion of 5.4% of FUTA payments.
For eg, if you owe 6% FUTA tax, then you would be eligible for getting a credit deduction of up to 5.4%, which ultimately means the final FUTA tax liability to be levied for you would be 0.6%.
Thus, the calculation would be like,
The Quarterly Wage of Employee = $7,000
FUTA Tax Rate = 0.006%
The Amount Payable for the FUTA Tax Deduction = $42
How to Calculate Payroll Taxes in QuickBooks?
Now that you know how to calculate payroll taxes, let’s get you guided with how to calculate payroll taxes in QuickBooks also.
To do so, buy payroll services, speaking of which, QuickBooks Payroll Services is the most optimal choice to choose for the same.
Follow the instructions that are explained in the next section:
Step 1: Visit https://quickbooks.intuit.com/payroll/
Step 2: Choose from the various plans and pricing and checkout to purchase. You can also try out the 30-days free trial version.
| Plan | Price | Tax Filing | Direct Deposit | Multi-State |
|---|---|---|---|---|
| Core | $45/mo + $5/employee | ✓ | ✓ | ✗ |
| Premium | $75/mo + $8/employee | ✓ | ✓ | ✓ |
| Elite | $125/mo + $10/employee | ✓ + Tax Penalty Protection | ✓ | ✓ |
Pricing as of March 2026.
Common QuickBooks Payroll Tax Issues
- Error: Tax Amounts don’t Match IRS Filing: Verify payroll item setup and ensure tax table updates are installed.
- Missing State Tax withholding: Confirm state registration in Payroll Settings > Tax Setup.
- Incorrect FUTA Calculation: Check if your state is on the credit reduction list.
If you still feel stuck while calculating payroll taxes, nothing to worry about! Our experts are seasoned to provide you with immediate assistance on calculating payroll taxes and more.
References: IRS Publication 15, FUTA rates: U.S. Department of Labor
Accounting Professionals, CPA, Enterprises, Owners
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Frequently Asked Questions (Faqs)
When are payroll taxes due?
Federal payroll taxes (941) are due quarterly: Q1 (April 30), Q2 (July 31), Q3 (October 31), Q4 (January 31). FUTA (940) is due annually by January 31. Verify deadlines at IRS.gov as they may shift for weekends/holidays.
How do I set up payroll tax items in QuickBooks?
You can manage payroll tax items through your payroll settings by navigating to Payroll or Payroll Settings, where you can select the appropriate taxes and enter your agency-specific account numbers and rates. If you have automated tax features enabled, QuickBooks will typically handle the calculation, payment, and filing for you once these details are correctly configured.
What are the common payroll tax rates for 2024?
Federal payroll tax rates for 2024 (such as Social Security at 6.2% for both employer and employee and Medicare at 1.45% each) remain consistent, but your total tax liability will vary based on state, local regulations, and individual employee income thresholds. It is recommended to check your specific state’s labor department website or consult a tax professional for the exact rates applicable to your business location and industry.
As a Small Business Owner, What Taxes do I Need to Pay?
As a small business owner, the number of taxes that you need to pay is:
- Payroll Taxes
- Federal and State Income Taxes
- Capital Gains Taxes
- Self-Employment Taxes, When Applicable
- Property Taxes
- Dividend Taxes
What are Payroll Tax Penalties Levied for Failing to Deposit Payroll Taxes?
The payroll tax penalties levied for failing to deposit payroll taxes are as follows:
- 2% penalty for 1–5 days late
- 5% penalty for 6–15 days late
- 10% penalty for 16+ days late
- 15% penalty for 10 days over post first IRS bill
Are there any other Payroll Tax Penalties Apart from Late Payment Penalties?
Yes. Apart from late payment penalties, payroll tax penalties to be levied are as follows:
- Failure to file penalty, Which is calculated on the unpaid tax as 5% per month
- Failure to pay penalty, Which is calculated on the unpaid tax as 0.5% per month
