What payroll deductions are employers required to withhold?

Payroll Deductions Employers Must Withhold in North Carolina

In North Carolina, employers are responsible for withholding specific payroll taxes and deductions from employee wages. Proper withholding ensures compliance with state and federal regulations and supports accurate payroll processing and reporting.

Mandatory Payroll Tax Withholdings

• Federal Income Tax: Employers must withhold federal income tax based on the employee’s Form W-4 and IRS tax tables.
• Social Security Tax: Withhold 6.2% of gross wages up to the annual wage base limit for Social Security.
• Medicare Tax: Withhold 1.45% of all gross wages for Medicare tax. Additional Medicare tax withholding may apply for high earners.
• North Carolina State Income Tax: Employers must withhold state income tax according to North Carolina’s withholding tables and employee withholding certificates.

Additional Payroll Deductions and Considerations

• Unemployment Insurance Contributions: Employers pay North Carolina unemployment insurance taxes but do not withhold these from employee wages.
• Voluntary Deductions: Employers may withhold voluntary deductions such as retirement plan contributions, health insurance premiums, or wage garnishments as authorized by employees or court orders.
• Recordkeeping and Reporting: Maintain accurate records of all withholdings and submit required reports to the IRS and North Carolina Department of Revenue on time.

As of 2026, employers should regularly review payroll tax rates and withholding tables, as these can change annually. Automating payroll tax calculations and filings can improve accuracy and compliance.