Payroll Tax Rates Calculator 2011, 2012

When you receive your paycheck, you will notice that taxes are taken out of your pay. Such taxes are known as payroll taxes, and they consist of federal income taxes, state income taxes, Social Security taxes, and Medicare taxes.

Your employer will withhold these taxes from your paychecks, as well as pay additional Social Security taxes and Medicare taxes for you. The withholding of taxes ensures that most of your income taxes will be paid regularly, so that you do not have to pay a large amount of taxes at the end of the year. Payroll tax rates may change from time to time, and they will determine how much your take-home pay will be.

When you start working for your employer, you will be asked to fill out the W-4 form. This form is used for calculating the amounts of federal income taxes and state income taxes to be withheld from your salaries or wages. The amounts withheld differ from one individual to another. If you have dependents, you will have a reduced amount of taxes taken out of your paycheck. Most states have similar income tax structure to that of the federal government, so the W-4 form can be used to calculate your state income taxes as well.

The federal income taxes that you need to pay can range from 10% to 35% of your gross income. The actual tax rate that you pay can be determined by a number of factors, such as your income, filing status, and pay schedule. For instance, if you are filing as a single head of household and you receive a bi-weekly pay of $1,500, which is in the $1387-to-$2604 tax bracket range, you are required to pay a flat rate of $164.70, as well as 25% of the difference between your pay and $1387. Therefore, the federal income tax that you need to pay is $192.95. State income tax rates vary from one state to another.

Social Security taxes and Medicare taxes are known as Federal Insurance Contributions Act, or FICA, taxes, and they are paid by you and your employer. Presently, Social Security tax rate for employees is 4.2% of the first $106,800 of taxable income, which is a 2% decrease from the previous year. Employers are required to pay a rate of 6.2%, but they do not have to pay any Social Security tax for employees that earn more than $106,800. As for Medicare taxes, both you and your employer have to pay the same rate of 1.45%, no matter how much you earn.

If you want to calculate your payroll taxes, you can try the payroll tax calculator free of charge, and they provide useful information that can help you make the right withholding adjustments.