I’m seeing a lot of political discussion about payroll taxes recently. What exactly are payroll taxes, what do they fund and who pays them?
I’ve done an amount of research on this already, but it just isn’t sticking for me. What’s the difference between what the employer pays and what the employee pays?
In: Economics
Payroll taxes are social security tax and medicare taxes collected on payroll. They are separate from income taxes. Social Security Tax is 6.2% paid by employee and 6.2% paid by employer. Medicare is 1.45% paid by employee and 1.45% paid by employer. Medicare also have some additional tax if you make over a certain amount. Self-employed people pay both halves.
The employer pays them on behalf of the employee and themselves, quarterly and file form 941. If you look at a pay stub you will see gross pay and then federal and state witholdings and then social security and medicare taxes.
Latest Answers