What is payroll withholding?

Payroll withholdings are the taxes that federal, state or local laws require employers to withhold and pay to the government on behalf of the employee. These withholdings include both federal and state taxes, plus Social Security and Medicare taxes, and they are withheld from an employee's wages every pay period.

Employers also pay a matching portion of Medicare and Social Security taxes. Additionally, employers must pay both state and federal unemployment tax. Credits are available to employers to help lower the required amount due in unemployment tax.

When filing income tax, employees must fill out Form W-4 to determine how much tax their employer withheld from their pay-checks.