A payroll tax is a tax that employers withhold from employees' wages to fund social insurance programs. This includes contributions to programs like Social Security and Medicare in the United States. Both employees and employers typically share the cost of these taxes, which are calculated as a percentage of the employee's earnings. Payroll taxes are essential for funding various government services and benefits. They help ensure that workers receive financial support during retirement or in case of disability. Understanding payroll taxes is important for both employees and employers to ensure compliance with tax laws and proper financial planning.