Payroll tax rates and thresholds change annually. Figures below reflect 2026 federal rules as of publication — always confirm current numbers with the IRS or a licensed tax professional before filing. You're ready to bring someone on. Maybe it's your first hire, maybe it's a freelancer for a one-off project. Either way, one question sits right at the start: is this a W-2 vs 1099 situation — a W-2 employee, or a 1099 contractor? Get this wrong, and it's not a paperwork inconve