Definition of Payroll tax:
Income tax and other statutory deductions made by the employer from the employees gross salary or wages.
A tax levied on a business according to the number of employees on its payroll.
A payroll tax is a tax withheld from an employee's salary by an employer who remits it to the government on their behalf. The tax is based on wages, salaries, and tips paid to employees. Payroll taxes are deducted directly from the employee's earnings and paid directly to the Internal Revenue Service (IRS) by the employer. In the United States, payroll taxes are divided into three main categories: Federal income, Medicare, and Social Security. The government also collects money for federal unemployment programs.
Payroll taxes are collected by federal authorities and some state governments in many countries including the United States. These payroll tax deductions are normally itemized on an employee's pay stub. This itemized list typically notes how much is withheld for federal, state, and municipal taxes, as well as any collected for Medicare and Social Security payments.
How to use Payroll tax in a sentence?
- A payroll tax is withheld by employers from each employee's salary and is paid to the government.
- Self-employed individuals pay the government self-employment taxes, which serve a similar function.
- Payroll taxes are used for specific programs; income taxes go into the government's general fund. For example, Social Security and Medicare taxes go into specific trust funds.
- When someone hires a bunch of workers they must take a payroll tax out of the money they will pay to their workers.
- One of President Trump's August 8, 2020, executive orders deferred payroll taxes for Americans earnings less than $100,000 per year ($8,000 a month) from September 1 until December 31. The taxes will have to be paid next year.
- Jeff was confused when his paycheck amounted to much less than he had anticipated, but his supervisor explained that the deductions were due to payroll tax .
- The good thing about the payroll tax was that it was automatically taken out of the employees gross wages which meant that the employer didnt have to manually deduct it.
Meaning of Payroll tax & Payroll tax Definition