What payroll deductions are employers required to withhold?

Payroll Tax Deductions Employers Must Withhold in North Dakota

In North Dakota, employers are responsible for withholding specific payroll taxes from employee wages to ensure compliance with federal and state requirements. Below is a practical overview of the mandatory payroll deductions.

Required Payroll Deductions

• Federal Income Tax: Employers must withhold federal income tax based on the employee’s W-4 form and IRS tax tables.
• Social Security Tax: Withhold 6.2% of wages up to the annual wage base limit for Social Security.
• Medicare Tax: Withhold 1.45% on all wages for Medicare. Additional Medicare tax of 0.9% applies to wages over the federal threshold, but this additional amount is only withheld from employee wages, not matched by the employer.
• North Dakota State Income Tax: Employers must withhold state income tax according to North Dakota’s withholding tables and employee’s withholding certificate.
• Unemployment Insurance (UI): Employers pay state unemployment insurance taxes; however, there is no employee withholding for UI in North Dakota.

Additional Operational Considerations

• Employee Classification: Correct classification of workers as employees or independent contractors affects withholding obligations.
• Recordkeeping: Maintain accurate payroll records of all withholdings and deposits for compliance and reporting.
• Timely Deposits: Deposit withheld taxes according to IRS and North Dakota Department of Revenue schedules to avoid penalties.
• Reporting Requirements: File quarterly payroll tax reports with the IRS and North Dakota tax authorities.
• Automation: Utilize payroll software to automate withholding calculations and tax filings for accuracy and efficiency.

As of 2026, staying updated with any changes in tax rates or withholding procedures from both federal and North Dakota state authorities is essential for operational compliance.