Free Payroll Tool
See what your payroll provider really charges
Most providers hide per-run and add-on fees. Audit your real cost per employee in about 30 seconds, free.
Run the Payroll Fee Auditor →Blog · Payroll Management · Restaurant
Restaurants & Hospitality: Payroll Tax Guide (2026)
Payroll tax for a restaurant is the federal stack every employer runs, withholding, 7.65 percent employer FICA, FUTA, deposits and Form 941, plus the restaurant items this page cites: IRS Instructions for Form 8027 (2025), IRS About Form 8846 and IRS. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Tax rules specific to restaurants
An employer that normally employed more than 10 employees on a typical business day in the preceding calendar year at a food or beverage operation where tipping is customary must file Form 8027 for each such establishment. If total reported tips for a payroll period are less than 8 percent of gross receipts, the shortfall must be allocated among directly tipped employees and shown in box 8 of Form W-2.
Food and beverage establishments use Form 8846 to claim a credit for the employer share of Social Security and Medicare taxes paid on certain employee tips; the credit is part of the general business credit.
Beginning with 2025 federal returns, employees and self-employed workers in qualified occupations may deduct qualified tips, defined as voluntary cash or charged tips including shared tips, up to $25,000 per year; the deduction phases out above $150,000 of modified adjusted gross income ($300,000 for joint filers).
The stack every restaurant runs
On one of the waiters and waitresses at the May 2025 national median of $35,230, the employer share of Social Security and Medicare is $2,695 a year, FUTA is $42 after the 5.4 percent state credit on the first $7,000, and income tax withholding follows the employee's W-4. Deposits are monthly or semiweekly depending on the prior lookback period, with a next-business-day deposit whenever $100,000 accumulates. Form 941 is due the last day of the month after each quarter; W-2s and any 1099-NEC at the $2,000 threshold are due January 31.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- An employer that normally employed more than 10 employees on a typical business day in the preceding calendar year at a food or beverage operation where tipping is customary must file Form 8027 for each such establishment. If total reported tips for a payroll period are less than 8 percent of gross receipts, the shortfall must be allocated among directly tipped employees and shown in box 8 of Form W-2. [IRS Instructions for Form 8027 (2025)]
- Food and beverage establishments use Form 8846 to claim a credit for the employer share of Social Security and Medicare taxes paid on certain employee tips; the credit is part of the general business credit. [IRS About Form 8846]
- Beginning with 2025 federal returns, employees and self-employed workers in qualified occupations may deduct qualified tips, defined as voluntary cash or charged tips including shared tips, up to $25,000 per year; the deduction phases out above $150,000 of modified adjusted gross income ($300,000 for joint filers). [IRS: What the No Tax on Tips deduction means for you (March 5, 2026)]
Read the full guide to how to calculate payroll taxes, and the rest of the restaurant payroll library.
Managed Payroll, Handled.
BEG manages payroll at $45 per employee per month, all-inclusive. Get an instant cost comparison for your business.
Frequently Asked Questions
Restaurant payroll tax: IRS Instructions for Form 8027 (2025)
An employer that normally employed more than 10 employees on a typical business day in the preceding calendar year at a food or beverage operation where tipping is customary must file Form 8027 for each such establishment. If total reported tips for a payroll period are less than 8 percent of gross receipts, the shortfall must be allocated among directly tipped employees and shown in box 8 of Form W-2.
Restaurant payroll tax: IRS About Form 8846
Food and beverage establishments use Form 8846 to claim a credit for the employer share of Social Security and Medicare taxes paid on certain employee tips; the credit is part of the general business credit.
What is the employer tax cost on one of the waiters and waitresses?
At the $35,230 national median (BLS OEWS, May 2025): $2,695 in employer Social Security and Medicare, $42 in FUTA after the state credit, plus state unemployment at the employer's assigned rate.
What does managed payroll cost for a restaurant?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Tip credit and tip pooling, high turnover and multiple pay rates are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Restaurants & Hospitality. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
From the blog