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What are payroll taxes?
Payroll taxes are taxes paid on the wages of employees and are used to finance social insurance programs, such as Social Security and Medicare. Payroll taxes make up 23 percent of combined federal, state, and local government revenue.
For employees, taxes are withheld from their paychecks and paid to the government by the employer. These taxes include federal, state, and local income taxes, and the employee's share of Social Security and Medicare taxes (FICA). Taxes that employers must pay include their share of FICA as well as federal and state unemployment taxes.