Payroll taxes
What are Indiana employer payroll taxes on a first employee?
Short answer: on a first Indiana employee paid $20 an hour for 40 hours a week, employer payroll taxes are $3,461.90 a year. That is $3,182.40 of employer FICA, $42.00 of net FUTA, and $237.50 of Indiana state unemployment tax at the typical new-employer rate. Workers’ comp and payroll software are extra costs, not payroll taxes.
Key takeaways
- Federal employer taxes apply in Indiana the same way they do in every state (IRS Publication 15, IRS Topic 751, IRS Topic 759 (Form 940/FUTA)).
- Indiana SUTA is administered by Indiana Department of Workforce Development. The Indiana DWD rate computation page lists a typical new-employer rate of 2.50% on the first $9,500 of wages ($237.50 if paid timely).
- SUTA and FUTA are front-loaded: you pay them only until each wage base is met, so early pay periods cost more than later ones.
On this page
See the Indiana stack Opens the calculator at $20 an hour, 40 hours, Indiana, and plumbing, including the verified ICRB minimum premium so you can compare taxes with the full cost.
Open the calculator with these figuresThe four employer payroll taxes
When you hire a W-2 employee in Indiana, the employer share of payroll taxes has four parts:
- Employer Social Security, 6.2% of wages up to the 2026 wage base of $184,500.
- Employer Medicare, 1.45% of all wages, with no wage-base cap.
- FUTA, which is 6.0% on the first $7,000 of wages, usually reduced to a net 0.6% when you pay state unemployment tax on time. For one employee that is $42.00.
- Indiana SUTA, paid to DWD on the first $9,500 of gross wages. A typical new-employer rate of 2.50% equals $237.50 per employee per year if you pay timely. Your notice may show a different rate, and delinquent rates can be higher.
Those figures come from IRS Publication 15, IRS Topic 751, IRS Topic 759 (Form 940/FUTA), the Indiana DWD rate computation page, and the January 2026 DOL state unemployment insurance laws table. You also withhold the employee share of FICA and Indiana income tax; those withheld amounts are the employee’s money, not an extra employer cost, so they are left out of the table below.
Worked example: $20 an hour, 40 hours, Indiana
This example uses a round $20 wage so you can compare it with the site’s other $20-an-hour pages. It is not a claim about what Indiana helpers earn.
| Line (one year, 2,080 hours) | Amount |
|---|---|
| Wages at $20.00/hour | $41,600.00 |
| Employer Social Security, 6.2% | $2,579.20 |
| Employer Medicare, 1.45% | $603.20 |
| FUTA, net 0.6% on first $7,000 | $42.00 |
| Indiana SUTA, typical new-employer 2.50% on first $9,500 | $237.50 |
| Employer payroll taxes for the year | $3,461.90 |
| Payroll taxes per paid hour | $1.66 |
A 40-hour week at $20 is $800 of wages. Employer FICA on that week is $61.20 ($49.60 Social Security + $11.60 Medicare). FUTA of $4.80 applies until $7,000 of wages is reached (after a little less than nine weeks). Indiana SUTA of $20.00 a week applies until $9,500 of wages is reached (after almost twelve weeks). Later weeks still owe FICA, but not FUTA or SUTA, which is why the first months feel more expensive.
What is not a payroll tax
Workers’ compensation is insurance. Most Indiana businesses must carry it once they have an employee; the Who Is Eligible page on the Indiana Worker's Compensation Board site, and the Board compliance page, explain the general rule and point to the statute. Advisory class rates are in the ICRB / NCCI advisory rates effective January 1, 2026. Those premiums are a real cost, and our Indiana trade pages include them, but they are not deposited with IRS or DWD as payroll tax.
Payroll software, tools, a truck, and benefits are also outside this tax total. The labeled Indiana plumbing example on the homepage adds the class 5183 minimum premium and Gusto Simple public pricing and comes to $46,172.90, or $22.20 per paid hour. Registering the state accounts is covered in the Indiana first-employee registrations guide.
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Compare payroll providers in our Gusto vs Paychex guide.
Compare taxes with the full cost Same $20, Indiana, plumbing defaults, with the ICRB minimum premium turned on.
Open the calculator with these figuresFrequently asked questions
What payroll taxes does an Indiana employer pay on a first employee?
You pay federal employer Social Security at 6.2%, employer Medicare at 1.45%, federal unemployment tax (FUTA) at a net 0.6% on the first $7,000 for most employers, and Indiana state unemployment tax. Indiana DWD lists a typical new-employer SUTA rate of 2.50% on the first $9,500 of wages. On a $20-an-hour, 40-hour employee, those employer payroll taxes total $3,461.90 a year. Workers' comp is insurance, not a payroll tax.
What is Indiana's unemployment tax rate for a new employer in 2026?
The Indiana DWD rate computation page lists a typical new-employer rate of 2.50% on the first $9,500 of each employee's gross wages per calendar year, which is $237.50 if paid timely. Your assigned rate can differ. The U.S. DOL January 2026 state UI table shows the same wage base and new-employer rate.
Are workers' compensation premiums an Indiana payroll tax?
No. Workers' comp is insurance, usually required once you have an employee, and it is priced from a class rate and payroll. It is a real cost, but it is not withheld or deposited like Social Security, Medicare, FUTA, or SUTA.
Federal figures were checked against 2026 IRS Publication 15 and the linked official pages in November 2026. Rows marked hypothetical are examples only. State rules and rates vary; confirm with your state agencies, an insurance agent, and your accountant before you hire.