Summary of Understanding Your Payroll Taxes

You should now have a better sense of what you’re getting for all those hours you put into your taxes. Like death, payroll taxes are a fact of life for employees and employers. Employees must pay a variety of taxes that are deducted from their paychecks, which include federal, state, and local income taxes and Medicare and Social Security taxes. Employers must match employee payments for Medicare and Social Security and also pay federal and state unemployment taxes.

Your federal, state, and local payroll tax liability depends on several factors, including your filing status and your tax rate. Medicare and Social Security tax rates are fixed and help support these programs that provide income and health care coverage for retired people. Employers are responsible for deducting and depositing payroll taxes on a timely basis to the relevant taxing authority.