What Is Payroll Tax?
Payroll taxes are taxes calculated on wages and paid by employees, employers, or both. In the United States they include Social Security and Medicare (FICA) taxes and federal unemployment tax (FUTA, paid by employers), plus state unemployment and other state-level payroll taxes that vary by state.
Payroll Tax vs. Income Tax
Income tax withheld from a paycheck is a prepayment of the employee's personal income tax; payroll taxes like FICA fund specific programs and have their own rates and limits.
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🔗 Related Terms
More Taxes Terms
- Adjusted Gross Income (AGI)
- Alternative Minimum Tax (AMT)
- Capital Gains Tax
- Capital Loss
- Child Tax Credit
- Cost Basis
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.