Payroll Taxes

Taxes withheld from wages to fund specific government insurance programs, including Social Security, Medicare, Medicaid, and unemployment benefits.

Employers pay half of these taxes for employees. Unlike over withheld income tax, payroll tax is not refunded at filing; it buys credits in the programs it funds.

Often confused with

Income Tax: Income tax funds general government spending; payroll taxes fund specific insurance programs.
Self-Employment Tax: An employee splits payroll tax with an employer; a self-employed worker pays both halves.

Taught in

5.1 Taxes, Net Income, and Budgeting

Payroll Taxes

Often confused with

Taught in

See also