Employee count, compensation, benefits, and taxes are all key components of payroll, the process of paying your employees. Changes in the economy, employees’ priorities, and technology shape everything from how you run payroll to your payroll costs. Are you staying on top of the latest payroll trends?
This article provides the data you need to understand the current state of small business payroll. Learn about employee wages and expectations, how businesses process payroll, and more for 2025.
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2025 Payroll trends: How much are employees paid in 2025?
Employee pay is generally rising in 2025. But by how much?
- $36.06 is the average hourly earnings workers received in April 2025
- $1,236.86 is the average weekly earnings workers received in April 2025
- Employee compensation increased by 3.6% year-over-year in March 2025, outpacing the 2025 cost of living adjustment of 2.5%
- 66% of U.S. employers said they expect 2025 salary increase budgets to be the same as 2024 salary budgets
How many employees are on payroll?
The small business workforce is growing in 2025, according to recent data. How quickly is the number of employees on payroll increasing, and how many workers do small businesses employ?
- In April 2025, there was a 2.1% increase in workers added to payroll
- 49% of small businesses have between 1 and 4 workers
How important are employee benefits?
Knowing what workers want is the cornerstone of building a competitive employee benefits package:
- 63% of job seekers look for benefits in job ads
- 81% of employees cited benefits as an important factor in whether they accept a job
What kind of benefits do employees have access to in the workplace?
- 86% have access to employer-sponsored health insurance
- 80% have access to paid holidays
- 79% have access to paid vacations
- 78% have access to paid sick leave
- 67% have access to defined contribution retirement plans
How do small businesses process payroll?
Running payroll can be a burdensome process for small businesses. The National Small Business Association’s (NSBA) 2025 Small Business Taxation Survey found the following:
- 21% of small businesses use a third-party software to run payroll
- 34% of small businesses use an external firm to run payroll
- 46% of small businesses spend 1 – 2 hours administering payroll taxes per month
- 50% of small businesses spend more than 3 hours administering payroll taxes per month
- 25% of small businesses spend $100 or less per month on payroll services
- 37% of small businesses spend between $101 – $500 per month on payroll services
Frustrated by payroll taxes? You’re not alone. Payroll tax is the second most burdensome tax for small businesses in terms of administration burden (15% of respondents) and financial burden (19%).
How often do employers run payroll?
The majority of employers run payroll once every other week, or a biweekly pay frequency, according to BLS data.
Here’s a breakdown of how many times employers run payroll per year and how many businesses use each pay period:
| Pay Period | Number of Paychecks Per Year | How Many Businesses Use It |
|---|---|---|
| Weekly | 52 | 27% |
| Biweekly | 26 | 43% |
| Semimonthly | 24 | 19.8% |
| Monthly | 12 | 10.3% |
How are employees paid?
Most employers pay employees via direct deposit, an electronic funds transfer (EFT) between the employer’s and employee’s bank accounts.
- 93% of employees receive their wages via direct deposit
Did You Know? Patriot Software offers a free direct deposit service!
How much are payroll penalties?
Employers can incur hefty payroll penalties for failing to file, pay, or deposit employment taxes.
Failure-to-file penalties have a maximum penalty of 25% of the tax. Failing to pay payroll taxes has a maximum penalty of 15%.
- In 2023, the IRS assigned over $8.5 billion in civil penalties due to employment tax problems
What is AI’s impact on payroll?
Artificial intelligence (AI) has its claws in all aspects of humankind—including business.
How will the use of AI, specifically generative AI (aka AI that creates new content like text, images, and videos), impact payroll?
- 46% of survey respondents said that generative AI use would decrease HR headcount by at least 3% over the next three years
- 12% of smaller organizations established employee incentives that reinforce generative AI
The biggest payroll trend of 2025 is ditching your payroll provider for Patriot Software. Patriot’s payroll software is fast, easy, and affordable, saving you time and money.
This is not intended as legal advice; for more information, please click here.
