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Employers pay matching pnoritos of Social Security (sometimes called FICA) and Medicare for each person classified as an employee. The employee pays (through paycheck deductions) any Federal and State Income . Federal Income is calculated based upon the information an employee provides on his W2: Married/Single, Number of Dependents, etc. Many states have their own version of the Federal W4 and calculate State Income in a similar manner. Some states (such as Arizona) have passed a flat rate law where employees pay a certain percentage. When an employee is paid a bonus, the IRS (and many states as well) required a higher percentage to be paid on bonus wages (currently 23% for Federal, state guidelines vary).However, the bottom line is that companies only pay Unemployment and pnoritos of Social Security and Medicare. The employees are the only ones who pay Federal and State Withholding/Income .