The Land of Enchantment is an amazing place to live and run a small business. But whether you own a luxury spa in Santa Fe or the place with the best green chile in Las Cruces, you and 150,000 other New Mexico small business owners all have one dreadful thing you have to deal with: payroll taxes.
That’s what we’re here for. We designed an easy payroll calculator to ease your payroll tax burden. All you have to do is enter wage and W-4 information for each of your employees, and the calculator will do the rest. It will calculate gross pay, take out deductions, and come up with the net pay you’ll need to write your employees’ paychecks.
First and foremost, we need to give Uncle Sam his due. Below is a quick overview of what you need to know when you’re calculating federal payroll tax withholdings. If you would like to get into each calculation in detail, we invite you to check out our step-by-step guide.
However, for salaries above $200,000, employees need to pay what’s called an Additional Medicare Tax. The rate for this additional tax is 0.9%, which makes the total 2.35%. Only the employee is responsible for paying the Additional Medicare Tax, not the employer.
Note that if you pay state unemployment taxes in full and on time, you are eligible for a tax credit of up to 5.4% , making your FUTA tax rate effectively 0.6%. FUTA tax is the sole responsibility of the employer. Your employees are not responsible for paying this tax.
Now that we’re done with federal income taxes, let’s move on to New Mexico state taxes. The state has a progressive income tax, broken down into four tax brackets ranging from 1.7% on the low end to 4.9% on the high end, which is still on the lower end compared to the rest of the country.
The tax breakdown can be found on the New Mexico Taxation & Revenue website.
As an employer, you’re responsible for paying SUI (remember, if you pay your state unemployment tax in full and on time, you get a whopping 90% tax credit on your FUTA tax bill).
New Mexico’s SUI rates range from 0.33% to 5.4%. The taxable wage base in 2019 is $24,800 for each employee.
If you are a new small business owner (congratulations, by the way!), you pay the greater of 1.0% or your industry’s average rate for the first two years.
Both employees and employers are required to pay a Workers Compensation Fee. The fee for the employer is $2.30 per employee per quarter. The fee for employees is $2.00 per quarter.
Details on the Workers Compensation Fee can be found here .
OnPay processes payroll and automates all your tax payments and filings.
Give yourself a pat on the back! You’ve checked “payroll taxes” off your to-do list so you can move onto the important things like growing your small business. Once each employee’s net pay is calculated (taking deductions and withholdings into consideration), you’re well on your way.
All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA, unemployment taxes, and worker’s compensation. Those numbers can add up quickly if you don’t account for them.
You will need to use Form 941 to file federal taxes quarterly, and Form 940 to report your annual FUTA tax. You can pay taxes online using the EFTPS payment system. More information about employment tax due dates can be found here.
Our calculator is here to help, but of course, you can never learn enough, especially when it comes to payroll taxes. Here are some additional resources and contact information to help you run payroll: