United States Global Payroll & Tax Information Guide

Last updated in July 2025.

Payslip Global Payroll Control Platform automates pre-payroll through to post-payroll delivering local flexibility within global standardization.

The United States, comprising 50 states and a federal district, is the world’s largest economy and a major hub for global commerce and innovation. With a highly diversified workforce, complex tax structures, and varied state-specific compliance rules, managing payroll in the U.S. requires careful navigation of both federal and state regulations.
Washington, D.C., is the federal capital, while major economic centers include New York, California, Texas, and Illinois.

Payroll in the United States - 2025 Updates

In 2025, the U.S. implemented several updates impacting payroll, taxation, and compliance:

• Federal Minimum Wage: Remains at $7.25/hour, but many states and cities have implemented higher local minimums.

• Social Security Wage Base: Increased to $173,700 annually.

• Medicare Thresholds: No wage base limit; an additional 0.9% surtax applies on income over $200,000.

• Remote Work Guidance: IRS issued updated guidelines for nexus and withholding rules across state lines.

• Paid Leave Laws: More states added paid family and medical leave programs (e.g., Minnesota, Maryland).

Employers must navigate both federal and state-specific updates to maintain compliance.

United States Payroll - Basic Facts

The U.S. payroll system operates on a biweekly or semi-monthly cycle for most employers. Taxes are deducted at the federal, state, and sometimes local levels, with complex reporting requirements.

• Workweek: Typically 40 hours (8 hours/day, Monday to Friday).

• Federal Holidays: 11 standard holidays (some states offer more).

• Overtime: 1.5x pay for hours over 40 per week under FLSA.

• W-2 Reporting: Employers file Form W-2 annually for employees.

• Tax Year: Calendar year (January 1 - December 31).

• Filing Portals: IRS and state tax department e-filing systems.

Tax and Social Security Considerations

Personal Income Taxes (Federal)

• Progressive Tax Rates (2025):

  • 10%: Up to $11,600 (single) / $23,200 (married)

  • 12%, 22%, 24%, 32%, 35%

  • Top rate: 37% for income over $609,350 (single) / $731,200 (married)

• Social Security (Employee): 6.2% up to $173,700 wage base

• Medicare (Employee): 1.45% on all wages + 0.9% surtax over $200,000

Employer Payroll Taxes

• Social Security (Employer): 6.2% up to $173,700

• Medicare (Employer): 1.45% (no cap)

• Federal Unemployment Tax (FUTA): 6.0% on the first $7,000 per employee (net 0.6% after credits)

• State Unemployment Insurance (SUI): Varies by state

Other Tax Types

1. Capital Gains Tax: 0%, 15%, or 20% depending on income.

2. Dividend Tax: Same as capital gains rates (qualified dividends).

3. Corporate Income Tax: Flat 21% federal; additional state rates apply (average 4%–9%).

4. Sales Tax (VAT equivalent): No federal VAT; state sales tax ranges from 0% to 7.25% (avg ~6%).

5. Property Tax: Levied at state/local level, varies significantly.

6. No Federal Inheritance or Wealth Tax: Estate tax applies to estates over $13.61 million (2025).

Social Security Considerations

For Employees

• Contribution: 7.65% total (6.2% Social Security + 1.45% Medicare)

• Additional Medicare Tax: 0.9% on income over $200,000 (single) / $250,000 (married)

• Benefits: Retirement, disability, survivors’ insurance, Medicare eligibility

For Employers

• Contribution: 7.65% (matching employee share)

• Reporting: Quarterly via IRS Form 941

• State-specific obligations: SUI rates and taxable wage bases differ by jurisdiction

Compensation and Benefits

Minimum Wage

• Federal Minimum Wage (2025): $7.25/hour

• State Rates (Selected):

  • California: $17.00/hour

  • New York (NYC): $16.50/hour

  • Washington State: $16.28/hour

  • Florida: $13.00/hour (set to rise)

Working Hours and Overtime

• Standard: 40 hours/week

• Overtime Pay: 1.5x hourly rate after 40 hours/week (non-exempt employees)

• Breaks: No federal mandate, but many states have meal and rest break laws

Federal Public Holidays

Here are the official U.S. federal holidays for 2025:

• New Year’s Day - January 1 (Wednesday)

• Martin Luther King Jr. Day - January 20 (Monday)

• Presidents’ Day - February 17 (Monday)

• Memorial Day - May 26 (Monday)

• Juneteenth National Independence Day - June 19 (Thursday)

• Independence Day - July 4 (Friday)

• Labor Day - September 1 (Monday)

• Columbus Day - October 13 (Monday)

• Veterans Day - November 11 (Tuesday)

• Thanksgiving Day - November 27 (Thursday)

• Christmas Day - December 25 (Thursday)

Note: States may have additional observed holidays.

Leave

Paid Leave (Varies by State)

1. Annual Leave: No federal mandate; employer policy or state law determines accrual.

2. Sick Leave:

   • Federal: No mandate

   • State-level laws in CA, NY, NJ, MA, WA, OR, and others

   • Accrual: Commonly 1 hour per 30 worked

3. Parental Leave:

   • Federal: 12 weeks unpaid under FMLA (for eligible employers/employees)

   • Paid programs in CA, NY, NJ, WA, CT, DC, MA, and others

4. Family and Medical Leave (FMLA):

   • Up to 12 weeks unpaid leave for qualified employees

5. Other Leaves:

   • Military Leave: USERRA mandates job protection

   • Jury Duty Leave: Mandatory in most states

   • Voting Leave: State-specific provisions

   • Bereavement Leave: Employer discretion or union contract

Foreign Workers in the United States

• Work Authorization: Non-U.S. citizens must hold a valid visa (e.g., H-1B, L-1, O-1, etc.)

• Social Security: Applies if the worker is employed and paid in the U.S.

• Tax Residency Rules:

  • Substantial presence test applies (>183 days over 3 years)

  • Tax treaties may reduce or eliminate double taxation

• Reporting Obligations:

  • Form I-9 for employment eligibility

  • Form W-8BEN or W-9 for tax classification

For more information about how our Global Payroll Control Platform integrates with local payroll providers in the United States, contact us today.