What are payroll withholding taxes?

Definition of Payroll Withholding Taxes

In the U.S. payroll withholding taxes are the taxes that an employer is required to deduct from its employees' gross wages, salaries, bonuses, and other compensation.

Examples of Payroll Withholding Taxes

The typical payroll withholding taxes include:

  • Each employee's portion of the Social Security and Medicare taxes (also referred to as FICA)
  • Each employee's federal income tax
  • Each employee's state, county, municipality income taxes, if applicable

After deducting the payroll withholding taxes from its employees, the employer is required to remit the amounts in a timely manner to the appropriate government agency.

In addition to payroll withholding taxes, employers are often required to withhold nontax amounts. Examples include part of the health insurance cost, savings plans, union dues, court-ordered garnishments, and so on.

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