Your deposit schedule depends on how much payroll tax you owe in a given period

The IRS does not assign the same deposit schedule to every employer. Instead, your schedule is determined by the total amount of federal income tax, Social Security tax, and Medicare tax you withhold and owe in a specific lookback period. The IRS publishes a new lookback period each year — usually July 1 through June 30 of the following year — and your deposit frequency for the next calendar year is based on what you owed during that lookback period.

There are two main deposit schedules: semi-weekly (twice per week) and monthly (once per month). Which one you use depends entirely on whether your total tax liability during the lookback period exceeded $50,000. If it did, you deposit semi-weekly. If it did not, you deposit monthly. This threshold is set by federal law and does not change based on your industry, location, or business type.

Key Takeaways

  • Your deposit schedule is determined by your total payroll tax liability during a lookback period (usually July 1 through June 30), not by your current payroll size.
  • If your lookback period tax liability was over $50,000, you must use the semi-weekly schedule; if it was $50,000 or less, you use the monthly schedule.
  • The IRS notifies you of your deposit schedule by November, and it takes effect the following January 1.
  • New employers with no lookback period are automatically placed on the monthly schedule until their first lookback period ends.
  • If you owe $100,000 or more on any single day, you must deposit by the next business day, regardless of your normal schedule.

How the lookback period works

The lookback period runs from July 1 through June 30 each year. The IRS adds up all the federal payroll taxes you owed during those twelve months — this includes federal income tax withheld from employee paychecks, the employer's share of Social Security tax, the employee's share of Social Security tax, the employer's share of Medicare tax, and the employee's share of Medicare tax. It does not include state or local taxes, unemployment insurance, or any other payroll-related payments.

Once the lookback period ends on June 30, the IRS calculates your total and compares it to the $50,000 threshold. By November of that year, the IRS mails you a notice telling you which schedule you will use starting January 1 of the following year. For example, if your lookback period ran from July 1, 2023, through June 30, 2024, you would receive notice by November 2024, and your new schedule would begin January 1, 2025.

This means your deposit schedule can change once per year. If your tax liability was high last year but drops this year, you will stay on the semi-weekly schedule until the next lookback period ends and the IRS recalculates. Conversely, if you were on the monthly schedule and your tax liability grows, you will move to semi-weekly the following January.

Semi-weekly vs. monthly deposit schedules

Under the semi-weekly schedule, you deposit payroll taxes twice per week. The specific days depend on when you pay your employees. If you pay on Wednesday, Thursday, or Friday, those taxes are due the following Wednesday. If you pay on Saturday, Sunday, Monday, or Tuesday, those taxes are due the following Friday. This schedule requires you to track your tax liability closely and have funds available twice each week.

Under the monthly schedule, you deposit all payroll taxes for a calendar month by the 15th of the following month. For example, taxes withheld in January are due by February 15. This schedule is simpler to manage because you deposit once per month instead of twice per week, but it requires you to hold onto tax money for longer before sending it to the IRS.

The semi-weekly schedule is more common for larger employers because they typically have higher payroll tax liability. The monthly schedule is more common for smaller employers. However, size alone does not determine your schedule — only your actual tax liability during the lookback period does.

What happens if you owe $100,000 or more in a single day

There is one exception to both schedules: the next-business-day rule. If your total payroll tax liability reaches $100,000 or more on any single day, you must deposit that amount by the next business day, regardless of whether you are on the semi-weekly or monthly schedule. This rule exists to prevent employers from holding large amounts of tax money and ensures the IRS receives deposits quickly when liability spikes.

For example, if you are on the monthly schedule and you run a large payroll on the 10th of the month that creates a $100,000 tax liability, you cannot wait until the 15th of the next month to deposit. You must deposit by the next business day. This rule applies even if you have never been on the semi-weekly schedule before.

New employers and their first deposit schedule

If you are a new employer with no lookback period history, the IRS automatically places you on the monthly schedule until your first lookback period ends. This gives you time to establish a tax liability history. Once your first lookback period (July 1 through June 30) is complete, the IRS will calculate your total and notify you whether you move to the semi-weekly schedule or remain on monthly.

New employers should still watch their tax liability closely during their first year. If you know your payroll will be large, you may want to set aside funds for semi-weekly deposits in anticipation of moving to that schedule. You can also contact the IRS if you believe your liability will exceed $50,000 and want to request the semi-weekly schedule early, though the IRS is not required to grant this request.

How to find out your current deposit schedule

The IRS mails you a notice (usually called a Form 941-S or a letter) by November each year telling you your deposit schedule for the following year. You can also check your deposit schedule by logging into your IRS e-services account if you have one set up, or by calling the IRS at 1-800-829-1040 and providing your Employer Identification Number (EIN).

Your payroll software or accountant can also tell you which schedule you are on. Many payroll systems pull this information directly from the IRS or require you to enter it manually, so it is worth confirming with your provider that they have the correct schedule on file. Depositing on the wrong schedule can result in penalties and interest, even if the total amount deposited is correct.

What changes your deposit schedule mid-year

Your deposit schedule is locked in for the calendar year based on the lookback period calculation. You cannot change it mid-year just because your payroll has grown or shrunk. However, the next-business-day rule still applies: if you hit $100,000 in liability on any single day, you must deposit by the next business day regardless of your normal schedule.

If your business experiences a major change — such as a large layoff that significantly reduces payroll — you can contact the IRS to request a change in your deposit schedule. The IRS may grant this request if your circumstances have changed substantially, but you must provide documentation of the change. Most employers straightforward wait for the next lookback period to end and the automatic recalculation to occur.

Frequently Asked Questions

Can I choose whether to deposit semi-weekly or monthly?

No. Your deposit schedule is determined by your tax liability during the lookback period, not by your preference. If you owed more than $50,000 during the lookback period, you must use semi-weekly. If you owed $50,000 or less, you must use monthly. The IRS assigns your schedule automatically.

What if I disagree with the deposit schedule the IRS assigned to me?

You can contact the IRS to request a review, but the calculation is based on your actual tax liability during the lookback period. If the IRS's records show you owed more than $50,000, they will place you on semi-weekly. You can verify the amount by reviewing your own payroll records and comparing them to what the IRS has on file.

Does my state deposit schedule have to match my federal deposit schedule?

No. State payroll tax deposits are separate from federal deposits and may follow a different schedule. Some states require monthly deposits, others require semi-weekly, and some have their own thresholds. You need to check your state's requirements separately and may end up depositing on different schedules for state and federal taxes.

What happens if I deposit on the wrong schedule?

Late deposits result in penalties and interest. The penalty is typically 2 percent of the unpaid tax if you deposit one to five days late, and increases from there. Even if you deposit the correct total amount but on the wrong date, you will owe penalties. This is why confirming your schedule with the IRS and your payroll provider is important.

Do I need to deposit payroll taxes if I have no employees?

No. Payroll tax deposits are only required if you have employees and are withholding taxes from their paychecks. If you are self-employed and have no employees, you do not use the deposit schedule system. Self-employed individuals pay estimated taxes on a different schedule.