What Are Payroll Taxes?
Payroll taxes are taxes levied by federal, state and local governments, paid by an employer on behalf of their employees. The exact amount is based on a percentage of the salaries and wages of employees and is paid to the Internal Revenue Service (IRS). Most of these funds are often used to finance specific social insurance programs, whereas income tax goes to the government’s general fund.
Employees must also contribute to some payroll taxes, though not as much as the employers. The sum of Social Security and Medicare taxes are both split between employees and employers.
Some elements of payroll taxes (like Social Security) are capped at a certain limit every year. The actual amount you'll owe the IRS depends on several factors, so be sure to consult with a tax professional.