What Are Payroll Taxes?


Quick Answer

Payroll taxes are the state and federal taxes an employer withholds from employees' paychecks or pays on behalf of employees, explains AllLaw. The Internal Revenue Service requires employers to withhold state and federal income taxes, as well as Medicare and Social Security taxes.

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Full Answer

Employers also are required to pay a matching amount of Medicare and Social Security taxes for each employee, and must pay federal and state unemployment taxes, according to AllLaw. New employees must fill out IRS Form W-4, which is used to calculate the amount of federal income taxes to be withheld from an employee's wages in each paycheck.

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