Payroll taxes are a significant component of the U.S. tax system, funding essential social programs and services. Both employers and employees are responsible for paying payroll taxes, which support Social Security, Medicare, and other benefits. Understanding payroll taxes and their impact is crucial for both employers and employees. Here’s an in-depth look at payroll taxes, how they work, and their importance. What are Payroll Taxes? Payroll taxes are taxes imposed on wages and salaries to fund social insurance programs. The primary payroll taxes in the United States are Social Security and Medicare taxes, collectively known as FICA (Federal Insurance Contributions Act) taxes. Additionally, there are federal and state unemployment taxes. Components of Payroll Taxes How Payroll Taxes are Collected