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Payroll requires careful management of federal, state, and local tax obligations. This article outlines key payroll tax responsibilities, including FICA, FUTA, additional Medicare tax, and state unemployment insurance, helping business owners stay compliant and confident in their processes.

Starting in 2025, certain workers may be eligible for new federal tax deductions on qualified tip and overtime income. These deductions, available through 2028, come with specific eligibility rules and reporting requirements for both employees and employers. While payroll taxes still apply, the changes may reduce taxable income for some workers.

Payroll tax compliance is a critical responsibility for small businesses. Even minor errors can result in costly penalties, damage employee trust, and create legal issues. To help you avoid common pitfalls, here are six essential tips to keep your payroll on track.