Semi-Weekly Deposit Rules: Windows, $100K Rule, and Penalties

If your business reported more than $50,000 in federal payroll tax liability during the IRS lookback period, you are on the semi-weekly deposit schedule, which means depositing withheld income tax, Social Security, and Medicare taxes twice a week based on when your employees are paid rather than on a fixed calendar date. For deposits in calendar year 2026, the lookback period runs from July 1, 2024, through June 30, 2025.¹ Miss a deadline and the penalty starts at 2% of the shortfall and climbs from there, so the mechanics deserve close attention.

Who Has to Use the Semi-Weekly Schedule

The IRS puts every Form 941 employer into one of two boxes each year, using total liability from line 12 of your four lookback-period returns. That figure includes federal income tax withheld plus both the employer and employee shares of Social Security and Medicare.²

$50,000 or less in the lookback period: monthly depositor.
More than $50,000: semi-weekly depositor for the full 2026 calendar year.¹

The classification holds for the entire year even if your current payroll shrinks. The only thing that can pull you onto the semi-weekly track mid-year is the $100,000 next-day rule, covered below.

Two boundaries are worth knowing. New employers count any lookback quarter before the business existed as zero liability, so they default to monthly in year one unless the $100,000 rule catches them. Employers with quarterly liability under $2,500 can skip deposits and pay with a timely Form 941, provided they don’t trip the $100,000 threshold during the quarter.³

The Two Deposit Windows

Semi-weekly does not mean every three or four days. It means the week is split into two payday groups, each with its own deadline:

Paydays that fall on Wednesday, Thursday, or Friday: deposit by the following Wednesday.
Paydays that fall on Saturday, Sunday, Monday, or Tuesday: deposit by the following Friday.

The trigger is the day employees actually receive their pay, not the day you run payroll internally.⁴ Each window is calculated on its own. Run two payrolls in the same week that straddle the split, and you owe two separate deposits with two separate deadlines.

Weekends and Holidays

When a Wednesday or Friday deposit deadline lands on a Saturday, Sunday, or federal legal holiday, the deadline rolls forward to the next business day. Stack multiple non-business days together and it keeps rolling, so a Friday deadline that hits a federal holiday moves to the following Monday.⁴

Only federal legal holidays observed in the District of Columbia extend the deadline. State holidays do not, even if your local bank is closed.⁵ Plan around your state’s calendar; the IRS will not.

The $100,000 Next-Day Rule

Any time accumulated tax liability reaches $100,000 on a single day, the full amount is due by the close of the next business day. This overrides both monthly and semi-weekly schedules.⁴

How the threshold is measured depends on where you already sit. Monthly depositors accumulate across the entire calendar month. Semi-weekly depositors accumulate only within the current Wednesday-through-Friday or Saturday-through-Tuesday window, resetting after each deposit.⁵ For monthly depositors, tripping the rule is not a one-time event: it makes you a semi-weekly depositor for the rest of the current year and all of the next. And the $100,000 is measured before any nonrefundable credits reduce your liability, so don’t count on credits to keep you under.⁶

The Small-Shortfall Safe Harbor

A modest shortfall does not automatically cost you a penalty. If your deposit is short by no more than $100 or 2% of what was required, whichever is greater, the failure-to-deposit penalty is waived so long as you make up the difference by the shortfall make-up date.⁵

For semi-weekly depositors, that make-up date is the first Wednesday or Friday (whichever comes first) on or after the 15th of the month following the month the deposit was due, or the quarterly return due date if earlier.⁵ The safe harbor covers rounding errors and small last-minute adjustments. It does not cover a substantially underfunded deposit.

How to Make the Deposit

Federal tax deposits must go through an electronic channel. The IRS accepts them via the Electronic Federal Tax Payment System (EFTPS), business Direct Pay, or your IRS business tax account.⁷ Cash and card are not deposit methods, and paying by a non-electronic route when you are required to deposit electronically can itself draw a 10% penalty on the deposit amount.⁸

If you’re new to EFTPS, allow about seven business days after enrolling to receive your PIN and activate the account.⁹ Deposits also need to be initiated at least one business day before the deadline: the IRS treats the deposit as made on the date funds actually debit your account, not the date you schedule the payment.

Schedule B With Every Form 941

Semi-weekly depositors file Schedule B with each quarterly Form 941. Schedule B reports your tax liability day by day, listing the amount on each date wages were paid, including federal income tax withheld and both shares of Social Security and Medicare.¹⁰ The Schedule B total has to match line 12 of Form 941 exactly.

Schedule B is a record of when liability arose, not a record of your deposits; the IRS already tracks deposits through the electronic system. If Schedule B is incomplete or illegible, the IRS averages your liability evenly across the quarter to calculate penalties, which almost always produces a bigger penalty than an accurate daily breakdown would.⁸

What Late Deposits Cost

The failure-to-deposit penalty under Section 6656 is calculated on the underpaid amount, and it climbs with the days late:

1 to 5 days late: 2% of the underpayment.
6 to 15 days late: 5% of the underpayment.
More than 15 days late: 10% of the underpayment.
Still unpaid 10 days after an IRS delinquency notice: 15% of the underpayment.¹¹

Penalties can be abated for reasonable cause where the failure was not willful neglect, but abatement is evaluated case by case and requires a written explanation with supporting documentation.

Personal Liability for Trust Fund Taxes

Deposit penalties fall on the business. The trust fund recovery penalty under Section 6672 reaches individuals. Any person responsible for collecting and paying over employment taxes who willfully fails to do so can be held personally liable for 100% of the unpaid trust fund taxes: the income tax withheld from employees and the employee share of Social Security and Medicare.¹² A responsible person is generally anyone with authority over the company’s financial decisions, which can include owners, officers, and bookkeepers with check-signing authority. The IRS must issue written notice before assessing the penalty, and multiple responsible persons can each be assessed the full amount, with rights of contribution among themselves.

1
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
2
IRS. Notice 931 – Deposit Requirements for Employment Taxes
3
Internal Revenue Service. Topic no. 757, Forms 941 and 944 – Deposit Requirements
4
Internal Revenue Service. Employment Tax Due Dates
5
eCFR. 26 CFR 31.6302-1 – Deposit Rules for Taxes Under FICA and Withheld Income Taxes
6
Internal Revenue Service. Instructions for Form 941
7
Internal Revenue Service. Depositing and Reporting Employment Taxes
8
Internal Revenue Service. Information About Your Notice, Penalty and Interest (Notice 746)
9
Internal Revenue Service. Business Enrollment (Form 9779)
10
Internal Revenue Service. Instructions for Schedule B (Form 941)
11
Office of the Law Revision Counsel. 26 USC 6656 – Failure to Make Deposit of Taxes
12
Office of the Law Revision Counsel. 26 U.S. Code 6672 – Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax