Employer payroll taxes include state and federal taxes that employers are required to pay and/or withhold on employees’ behalf.
There Are Two Categories Of Payroll Tax
- The first category, known as the withholding tax, includes deductions that are required by federal and state governments. The withholding tax is paid by withholding wages from employees’ pay.
- The second category of payroll tax is paid by employers from their own funds and is linked to employing a worker. These are comprised of fixed charges or charges proportionate to an employee’s pay.
Federal payroll taxes fund Social Security and Medicare contributions known together as the Federal Insurance Contributions Act (FICA) tax. Unemployment insurance is also funded through payroll taxes and vary by federal, state and industry guidelines.
Managing payroll taxes alone is no easy feat. That’s why medium and small businesses trust Paycor’s payroll and tax filing technology to prevent compliance missteps. For even more information on payroll taxes, check out this article.
