What payroll deductions are employers required to withhold?

Payroll Tax Deductions Employers Must Withhold in Virginia

In Virginia, employers are responsible for withholding specific payroll taxes from employee wages to ensure compliance with federal and state regulations. Understanding these deductions is essential for accurate payroll processing and reporting.

Mandatory Payroll Deductions

• Federal Income Tax: Employers must withhold federal income tax based on the employee’s Form W-4 and IRS tax tables.
• Social Security Tax: Employers withhold 6.2% of wages up to the annual wage base limit for Social Security.
• Medicare Tax: Employers withhold 1.45% of all wages for Medicare tax. Additional Medicare tax withholding of 0.9% applies to wages above a threshold, but this is only withheld by the employer from the employee’s pay.
• Virginia State Income Tax: Employers must withhold Virginia state income tax based on the employee’s Virginia Form VA-4 and state withholding tables.
• Virginia Unemployment Insurance (VUI): This is an employer-paid tax; employers do not withhold it from employee wages but must account for it in payroll expenses.

Additional Considerations

• Voluntary Deductions: Employers may also withhold voluntary deductions such as retirement plan contributions, health insurance premiums, and wage garnishments as authorized by the employee or court orders.
• Employee Classification: Proper classification of workers as employees or independent contractors affects withholding obligations. Only employees require payroll tax withholding.
• Recordkeeping and Reporting: Maintain accurate records of all withheld amounts and submit required payroll tax reports to the IRS and Virginia Department of Taxation on time.
• Payroll Automation: Using payroll software can help ensure correct withholding calculations and timely tax deposits.

As of 2026, staying updated with any changes in tax rates or withholding requirements from federal and Virginia state authorities is critical for ongoing compliance.