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What are payroll taxes?

Author:
Harold Averkamp, CPA, MBA

Definition of Payroll Taxes

The payroll taxes are the federal, state, and local taxes that pertain to the wages, salaries, commissions, bonuses, etc. of a company’s employees.

Some of the employee-related payroll taxes are:

  • Withheld from employees’ wages and then matched by the employer. The matching amount is an additional expense of the employer
  • Withheld from employees’ wages but are not matched by the employer.
  • Paid solely by the employer. The amount is additional expense of the employer

The employer must remit all of the above payroll taxes to the respective government agency within specified periods of time.

Examples of Payroll Taxes Withheld from Employees and Matched by Employer

Examples of payroll taxes that are paid by both the employee and the employer include the following:

Examples of Payroll Taxes Withheld from Employees’ Wages Not Matched by Employer

Examples of payroll taxes which are withheld from an employee’s gross wages and then remitted to the government agency by the employer include:

  • Federal income taxes
  • State and local income taxes (when applicable)
  • Additional Medicare Tax for high income employees

Examples of Payroll Taxes Paid Solely by the Employer

Some payroll taxes are not withheld from the employees’ wages. Instead, the entire amount is paid by the employer. Examples include the following:

  • State Unemployment taxes
  • Federal unemployment taxes or FUTA

Guidance on federal payroll taxes is available at www.IRS.gov and from your state government.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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