Best Free Payroll Software 2026 (+ Cheap Paid)

The honest reality about free payroll software

Payroll software has unavoidable operating costs that make truly free, full-featured tools economically impossible: tax filing infrastructure across 50 states, direct deposit banking rails, year-end W-2 and 1099 generation, and compliance updates as tax laws change. Any tool offering this for free is either subsidizing it through other revenue (accounting software upsells), cutting corners on compliance, or limiting features significantly.

What you actually get with "free" payroll tools: basic payroll calculation (math only, no filing), manual check printing, or scheduling software without tax handling. What you don't get: automated federal and state tax filing, direct deposit, W-2 generation, or new hire reporting. For W-2 employees, handling payroll taxes manually is legally your responsibility but practically complex, employer FICA, FUTA, state income tax withholding, quarterly filings, and year-end reconciliation. A single error can result in IRS penalties.

The cleaner framing: the question is not "free vs. paid" but "what is the minimum acceptable cost to run payroll compliantly." For most small businesses with W-2 employees, that floor is approximately $37–57/month (Patriot Payroll Full Service for a 5-person team). For contractor-only businesses, it can be as low as $6–30/month.

Genuinely free options (with major limitations)

Payroll4Free: The most-cited free payroll software. Free for under 25 employees if you self-file taxes and print checks. Adds $12.50/month for direct deposit and $12.50/month for automated tax filing, making the effective cost $25/month if you want the features that make payroll software worth using. The interface is dated and support is limited. Worth considering for a solo founder doing payroll for 1–3 employees who is comfortable handling state registrations and tax filings manually.

Homebase (free scheduling tier): Homebase's free plan covers scheduling and time tracking for up to 20 employees. It does not include payroll, that requires the Homebase Payroll add-on at $35/month. The free scheduling tier is genuinely useful and the payroll add-on is competitive. But framing it as "free payroll" is misleading.

Wave Payroll ($20/month base): Wave offers free accounting and invoicing software with a paid payroll add-on. In "self-service" states (states where Wave handles filing): $20/month + $6/employee. In "tax service" states (most major states where Wave files for you): $35/month + $6/employee. For a 5-person team in a tax-service state, that's $65/month, not free, but one of the lower-cost full-service options. The Wave accounting + Wave Payroll combination is worth evaluating if you also need free accounting software.

Cheapest paid options: full-service payroll

Bottom line: if full-service payroll with automated tax filing is your requirement, Patriot Full Service at $37/month + $4/employee is the cheapest legitimate option. For a 5-person team, that's $57/month. The G2 "Best Value" badge in the small business payroll category consistently goes to Patriot. The trade-off for the low price: a dated interface, slower direct deposit (up to 4 days standard), and no mobile admin app.

Contractor-only: the cheapest compliant path

If you pay 1099 contractors rather than W-2 employees, the costs drop significantly. There are no employer payroll taxes for contractors, you pay them and file a 1099-NEC for any contractor paid over $600/year. The software requirement is simpler: track payments, generate 1099-NEC forms at year-end, and handle payment logistics.

Gusto Contractor-only plan: $6/contractor/month. Covers unlimited contractor payments via direct deposit, 1099-NEC filing at year-end, and a contractor self-service portal for onboarding and payment method setup. For a business with 3–10 US contractors, this is one of the most cost-effective compliant solutions.

Free for very simple contractor payments: if you pay contractors via ACH (bank transfer) or check and manually prepare 1099-NEC forms via the IRS free filing system (for under 10 forms), you can manage contractor payments without payroll software. This breaks down quickly when you have multiple contractors, multiple pay periods, or contractors who need payment in multiple currencies.

Payroll4Free & TimeTrex: the truly-free tools and their catches

Two names come up repeatedly when people search for zero-cost payroll: Payroll4Free and TimeTrex. Both are real, both run live payrolls, and both attach conditions that matter once you read past the homepage.

Payroll4Free is free for businesses with 25 or fewer employees. It calculates federal, state, and local taxes, handles unlimited pay runs, supports W-2 and 1099 workers, and even generates the tax forms you need. The catch sits in the fine print. Payroll4Free will *calculate* and *prepare* your tax deposits, but it does not *file or pay* them on the free plan. To have the service actually remit taxes to the IRS and your state agency, you pay roughly $30/month. Using your own bank for direct deposit is also a paid add-on (about $30/month); otherwise you fund deposits through their account. The software itself is dated, Windows-oriented, and ad-supported, but the math is accurate and the price for a small W-2 shop is genuinely $0 if you handle filings yourself.

TimeTrex is a different animal. Its free Community Edition is open-source time-and-attendance and payroll software you can self-host. That word, self-host, is the catch. You need a server, someone comfortable installing and patching a PHP/MySQL stack, and the willingness to configure tax tables yourself. There is no support line on the free tier and no guarantee tax rates stay current without your intervention. For a business with an IT person who wants full control, it works. For a non-technical owner, the time cost dwarfs the $40-50/month a hosted competitor charges.

The honest summary: both tools are free in the literal sense, but the free version always pushes the two hardest parts of payroll, tax filing and direct deposit, onto you. Know which job you are actually offloading before you commit.

Why free payroll is risky: tax filing, penalties, and no support

The sticker price is the cheapest part of payroll. The expensive part is getting federal and state tax filings right, on time, every quarter, and that is precisely what free tools tend to skip or do poorly.

Most free plans, including Payroll4Free's base tier, calculate your tax liability but leave the actual filing and remittance to you. That means you are personally responsible for Form 941 each quarter, Form 940 annually, W-2s and W-3s in January, plus state withholding and unemployment filings that differ in every state. Miss a federal deposit deadline and the IRS penalty starts at 2% and climbs to 15% of the unpaid amount depending on how late you are. A single missed quarterly deposit on a small payroll can erase a full year of 'savings' from skipping a $40/month full-service tool.

Multi-state complexity makes this worse. If you have one remote employee in another state, you now owe registration, withholding, and unemployment filings in that state too. Free tools rarely automate this, and they almost never flag the nexus obligations a new state hire creates. Paid full-service providers register and file across states for you; free ones hand you a form and wish you luck.

Then there is support. When the IRS sends a notice, when a state rejects a filing, or when an employee's withholding looks wrong, free tiers offer forums, knowledge bases, or nothing. Full-service platforms put a representative on the phone and, in many cases, cover the penalty if their calculation caused it. Gusto, OnPay, and QuickBooks Payroll all advertise some form of accuracy or tax-penalty guarantee. No free tool does.

Free payroll is not a scam. It is a transfer of liability. You save cash and take on compliance risk that a $17-49/month service would otherwise absorb. Whether that trade is smart depends entirely on how confident you are filing payroll taxes yourself.

Cheapest full-service: Patriot at $17+$4 and Wave

If the compliance risk above makes you nervous, the next question is the floor for *real* full-service payroll, meaning the provider files and pays your taxes. The answer is lower than most people expect.

Patriot Payroll is the value leader. Its Full Service plan runs $17/month base plus $4 per employee per month, and that $17 includes federal, state, and local tax filing and deposits. For a 3-person shop that is $29/month all-in, with a tax-filing accuracy guarantee behind it. Patriot supports unlimited payroll runs, both W-2 and 1099 workers, and free direct deposit, and it holds a G2 score around 4.8/5, one of the highest in the category. There is also a self-service tier at $17+$4 where you handle filings yourself, but the full-service plan is the one worth paying the few extra dollars for.

Wave Payroll is the other budget option, structured by geography. In its tax-service states (currently 14 states including California, Texas, New York, and Florida), Wave files and remits your payroll taxes for $40/month plus $6 per employee. In all other states it drops to $20/month plus $6 per employee, but you file taxes yourself. Wave's appeal is the tight integration with its free accounting and invoicing tools, so a freelancer-turned-employer already living in Wave can add payroll without a new login.

For comparison, the better-known names start higher: Gusto Simple is $49/month plus $6 per employee, OnPay is a flat $40/month plus $6 per employee with all features included, and QuickBooks Payroll Core is $50/month plus $6 per employee. Those buy you slicker interfaces, better onboarding, and deeper benefits administration. But if your only goal is correct, filed-on-time payroll for a handful of W-2 employees, Patriot at $17+$4 delivers the same core outcome for less than half the price.

When free actually works vs when to pay

Free payroll is the right call more often than the paid vendors would like you to believe, but only in specific situations. The deciding factors are worker type, headcount, number of states, and how comfortable you are filing taxes yourself. The table below maps common scenarios to a recommendation.

The pattern is clear. Free works when you have a small W-2 headcount in one state and the discipline to file taxes on schedule, or when you pay only contractors. Free works if you self-host and have technical hands available.

Pay the moment you cross a state line, add benefits, grow past a handful of employees, or simply value not thinking about Form 941. At Patriot's $17+$4, the full-service jump is so cheap that the real question is rarely 'free or paid' but 'how much risk do I want to keep.' For most growing businesses, handing off tax filing for the price of a couple of lunches is the obvious move; for a side business with one W-2 helper, staying free is perfectly defensible.

Frequently asked questions

Is Payroll4Free actually free? For businesses with 25 or fewer employees, yes for the core calculation and check-printing, but automated tax filing and direct deposit are paid add-ons at roughly $12.50/month each, so the fully-featured version runs closer to $25/month [Forbes Advisor, 2026].

What does HR.my offer that Payroll4Free doesn't? HR.my allows unlimited employees at no cost, but it does not include any tax calculation service, which makes it unsuitable for US businesses that need accurate federal and state withholding.

What is the real risk of using free payroll software? Free tiers typically calculate tax liability but leave filing and remittance to you. Missing a federal deposit deadline triggers an IRS penalty starting at 2% and climbing to 15% of the unpaid amount depending on lateness [IRS, 2025].

What is the cheapest full-service payroll option if I don't want to self-file? Patriot Payroll's Full Service plan runs $37/month plus $4 per employee and includes federal, state, and local tax filing, making it one of the lowest-cost options that still hands off compliance.

Are free tools viable for a multi-state business? Rarely. Free tools seldom automate multi-state registration, withholding, or unemployment filings, and they almost never flag the nexus obligations a new out-of-state hire creates.

Is free payroll a good fit for contractor-only businesses? Often yes. Since there's no employer tax withholding for 1099 contractors, some platforms let you track contractor payments and generate 1099-NEC forms at year-end for free or close to it, since the compliance burden is much lighter than W-2 payroll.