Maple syrup, apple pie, and a whole lot of ice cream. Many of us would say they’re all the food groups we need! Vermont is a very special place. That’s why you started a small business here. And whether you strive to grow as big as Ben & Jerry’s or prefer to keep your small business small, there is one thing that you and all the other small business owners can agree upon: you’d rather dig into a pint of Chunky Monkey than worry about payroll taxes.
We couldn’t agree more, so we went ahead and designed a nifty payroll calculator that can figure out all of the federal and Vermont state payroll taxes for you and your employees. All you have to do is input wage and W-4 information for each employee into the calculator, and it will do the rest of the work for you.
First of all, let’s give Uncle Sam his due. Here’s a quick rundown of the components that go into federal tax withholdings. For a more detailed explanation on all of the steps below, we invite you to head on over to our comprehensive step-by-step guide.
For employees who more than $200,000 per year, you’ll need to withhold an Additional Medicare Tax of 0.9%, which brings the total employee Medicare withholding above $200,000 to 2.35%. You don’t need to match the Additional Medicare Tax. Only employees are responsible for paying this tax.
FUTA taxes come with a huge caveat that you should know about. You can claim a tax credit of up to 5.4% for state unemployment tax you pay, as long as you pay in full and on time. It’s an easy way to save a whopping 90%, so make sure you take advantage! Only you as the employer are responsible for paying FUTA taxes, so you don’t need to withhold FUTA from your employees’ paychecks.
Now that we’re done with federal payroll taxes, let’s look at Vermont state income taxes. Vermont charges a progressive income tax, broken down into four tax brackets. The 2019 tax rates range from 3.35% on the low end to 8.75% on the high end. Employees who make more than $195,450 will hit the highest tax bracket.
There are no local taxes, so all of your employees will pay the same state income tax no matter where they live.
OnPay processes payroll and automates all your tax payments and filings.
As an employer in Vermont, you have to pay unemployment insurance to the state. The 2019 rates range from 0.8% to 6.5% on the first $15,600 in wages paid to each employee in a calendar year.
If you’re a new employer (congratulations on getting started!), you pay a flat rate of 1%.
Remember to pay in full and on time so that you can get a FUTA tax credit!
Time to dig in! You’ve checked it off your to-do list so you can focus on growing your business. Once each employee’s net pay is calculated (after taking deductions and withholdings into consideration), you’re good to go.
All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and unemployment taxes. Those numbers can add up quickly!
You will need to fill out Form 941 to file federal taxes on a quarterly basis, and Form 940 to report your annual FUTA liabilities. You can pay taxes online using the EFTPS payment system. All the IRS employment tax due dates can be found here.
If you would like to learn more, here are some helpful links that we think can be useful: