GA · Payroll tax 2026
The true cost of hiring in Georgia
What a W-2 employee actually costs an employer in Georgia— and how that compares to a 1099 contractor — with the state's real 2026 unemployment-insurance rates built in.
Hiring in Georgia means operating inside one of the South's most economically diverse states — Atlanta anchors a $600-billion metro economy built on logistics, financial services, film production, and Fortune 500 headquarters, while manufacturers in Savannah and Augusta add to a growing industrial base. For a W-2 employee, a Georgia employer's cost extends well beyond the agreed salary. Federal obligations (Social Security at 6.2%, Medicare at 1.45%, FUTA at 0.6% net) apply to everyone, and Georgia layers on a state unemployment insurance contribution. New employers pay SUI at 2.7% on the first $9,500 of each worker's wages — that's a maximum of $256.50 per employee per year in state UI tax alone until the employer establishes an experience rating. Georgia does impose a state income tax on wages, so payroll systems must withhold at the applicable rate. Add workers' compensation premiums, any employer-sponsored benefits, and payroll-processing costs, and the true cost of a $60,000 hire can run 20–30% above base salary. Misclassifying a worker as a 1099 contractor to avoid these costs carries real legal exposure under Georgia's ABC test for unemployment insurance.
Estimate a Georgia hire
Pre-filled with Georgia's 2.7% new-employer SUI rate. Adjust salary, benefits, and the 1099 rate to fit your hire.
Georgia employer tax facts
| Item | GA |
|---|---|
| New-employer SUI rate | 2.7% |
| SUI taxable wage base | $9,500 |
| Federal FICA (employer) | 7.65% |
| FUTA | 0.6% |
| State income tax on wages | Yes |
| Worker classification test | ABC test for UI |
Example: a $75,000 hire in Georgia
At a $75,000 base salary with typical benefits, a W-2 employee in Georgia costs an employer $99,336 per year — $24,336 above base pay. An equivalent 1099 contract at $75,000 would cost $24,336 less; the breakeven contract rate is $99,336.
Misclassification risk in Georgia
Test: ABC test for UI
ABC test for UI; back taxes and penalties apply.
Penalties by stateCompare nearby rates
Georgia's 2.7% new-employer SUI rate sits near Alabama (2.7%), District of Columbia (2.7%), Florida (2.7%), Kansas (2.7%). See the full 51-state comparison or the 2026 employer payroll tax reference.
Georgia hiring-cost FAQ
- What SUI rate does a new Georgia employer pay, and how much does it cost per worker?
- New employers in Georgia are assigned a 2.7% state unemployment insurance rate applied to the first $9,500 of each employee's wages, capping the annual SUI cost at $256.50 per worker. Once you accumulate enough payroll history, the Georgia Department of Labor assigns an experience-based rate that may be higher or lower.
- Does Georgia tax employee wages at the state level?
- Yes. Georgia levies a state income tax on wages, which means employers must withhold state income tax from each paycheck and remit it to the Georgia Department of Revenue. This adds a payroll-administration obligation on top of the federal withholding requirements.
- What happens if a Georgia employer misclassifies a W-2 worker as a 1099 contractor?
- Georgia applies the ABC test for unemployment insurance purposes, and a worker who fails that test is legally an employee regardless of how the contract is written. Misclassification can trigger back unemployment taxes, interest, and penalties — plus potential liability for unpaid workers' compensation coverage.