What payroll taxes do small businesses need to pay?

Payroll Taxes for Small Businesses in Nebraska

Small businesses operating in Nebraska must manage several payroll tax obligations to stay compliant and ensure smooth operations. Understanding these taxes helps in accurate payroll processing and timely reporting.

Federal Payroll Taxes

• Social Security and Medicare Taxes (FICA): Employers must withhold Social Security and Medicare taxes from employee wages and contribute a matching amount.
• Federal Unemployment Tax Act (FUTA): Employers pay FUTA tax to fund unemployment benefits. This is a federal tax paid only by employers.
• Federal Income Tax Withholding: Employers withhold federal income tax from employees’ wages based on IRS withholding tables and employee W-4 forms.

Nebraska State Payroll Taxes

• Nebraska State Income Tax Withholding: Employers must withhold state income tax from employees’ wages. Nebraska uses withholding tables provided by the Nebraska Department of Revenue.
• Nebraska Unemployment Insurance (UI): Employers pay state unemployment insurance taxes to support unemployment benefits for workers. Rates vary based on employer experience and industry.

Operational Considerations

• Registration: Register with the Nebraska Department of Revenue and the Nebraska Department of Labor to report and remit state payroll taxes.
• Recordkeeping: Maintain accurate payroll records, including wage payments, tax withholdings, and tax filings, for at least four years.
• Reporting: File federal payroll tax returns (e.g., Form 941) and Nebraska state payroll tax returns on the required schedules.
• Automation: Use payroll software or services that support Nebraska payroll tax calculations and filings to reduce errors and save time.
• Compliance Updates: As of 2026, regularly review Nebraska tax rate changes and federal payroll tax updates to ensure ongoing compliance.