What payroll deductions are employers required to withhold?

Payroll Tax Deductions Employers Must Withhold in Wisconsin

Employers operating in Wisconsin have specific payroll tax withholding responsibilities. Properly managing these deductions is essential for compliance and smooth payroll operations.

Mandatory Payroll Deductions

• Federal Income Tax Withholding: Employers must withhold federal income tax based on employee W-4 forms and IRS tax tables.
• Social Security and Medicare Taxes (FICA): Employers are required to withhold Social Security tax at 6.2% and Medicare tax at 1.45% from employee wages, matching these amounts as employer contributions.
• Wisconsin State Income Tax: Wisconsin requires withholding of state income tax according to employee W-4W forms and state withholding tables. Rates vary by income bracket.
• Unemployment Insurance (UI): While UI taxes are primarily employer-paid, employers must maintain accurate payroll records for UI reporting purposes.

Additional Considerations

• Local Taxes: Wisconsin does not have local income taxes, simplifying withholding requirements compared to some states.
• Voluntary Deductions: Employers may also withhold voluntary deductions such as retirement plan contributions, health insurance premiums, and wage garnishments, but these are not mandated by state payroll tax law.
• Recordkeeping and Reporting: Maintain detailed payroll records and submit withholding reports and payments on schedule to both the IRS and Wisconsin Department of Revenue to avoid penalties.
• Automation: Consider payroll software or services that automatically calculate and withhold the correct amounts based on current federal and state rates.

As of 2026, staying current with any changes to federal and Wisconsin withholding rates or reporting requirements is critical for operational compliance.