Payroll taxes are withheld from your paycheck and sent to the IRS by your employer, not by you

Your employer deducts federal income tax, Social Security tax (6.2%), and Medicare tax (1.45%) from each paycheck. Your employer then sends those withheld amounts to the IRS on a schedule — usually monthly or semi-weekly depending on the size of the payroll. You do not write a check to the IRS for these taxes yourself. The money comes out of your gross pay before you see your net paycheck.

Your employer also pays a matching amount: 6.2% for Social Security and 1.45% for Medicare. That employer portion does not come from your paycheck — it is a separate business expense your employer covers. State and local income taxes, if your state or city has them, follow the same pattern: withheld from your pay and sent by your employer to the state or local tax authority.

The only time you pay payroll taxes directly is if you are self-employed. In that case, you pay both the employee and employer portions (15.3% combined for Social Security and Medicare) when you file your tax return or make quarterly estimated tax payments to the IRS.

Key Takeaways

  • Your employer withholds federal income tax, Social Security, and Medicare from your paycheck and sends it to the IRS on a set schedule.
  • Your employer also pays a matching portion of Social Security and Medicare tax from their own funds, which you do not see deducted from your pay.
  • The amount withheld depends on the W-4 form you filled out when you started the job, which tells your employer how much to take out.
  • If you are self-employed, you pay both portions yourself through quarterly estimated payments or when you file your annual tax return.
  • State and local income taxes follow the same withholding pattern as federal taxes, though not all states have income tax.

How your employer decides what to withhold

When you start a job, you complete a W-4 form (Employee's Withholding Certificate). This form tells your employer how much federal income tax to take out of each paycheck. You provide information about your filing status (single, married, head of household), the number of dependents you claim, and any other income or deductions you expect.

Your employer uses this information to calculate your withholding using IRS tables. If you claim zero dependents and are single, more tax comes out. If you claim dependents or have a spouse who also works, less comes out. The goal is to have roughly the right amount withheld so that when you file your tax return in April, you either owe very little or get a small refund.

You can change your W-4 at any time during the year — for example, if you get married, have a child, or take a second job. A new W-4 takes effect on the next paycheck after your employer receives it. Changing your W-4 does not change what you already owe in taxes; it only changes what comes out of future paychecks.

The schedule: when your employer sends the money

Your employer does not send withheld taxes to the IRS every payday. Instead, they follow a deposit schedule set by the IRS based on how much payroll tax they owe. Most small employers deposit monthly — they collect withholdings throughout the month and send them to the IRS by the 15th of the following month. Larger employers deposit semi-weekly: on Wednesday for paychecks issued Tuesday through Thursday, and on Friday for paychecks issued Friday through Sunday.

Deposits are made electronically through the Electronic Federal Tax Payment System (EFTPS) or through a payroll service or bank. Your employer cannot mail a check; the IRS requires electronic payment for all payroll taxes.

At the end of the year, your employer files Form 941 (Employer's Quarterly Federal Tax Return) to reconcile what they withheld and deposited against what you actually owed. If they withheld too much, you get a refund. If they withheld too little, you owe the difference when you file your personal return.

What happens if your employer does not pay

If your employer withholds taxes from your paycheck but does not send them to the IRS, you are still liable for those taxes. The IRS can pursue you for unpaid withholdings, even though the money was taken from your pay. This is rare but does happen with small businesses or employers in financial trouble.

If you suspect your employer is not paying withheld taxes, you can report it to the IRS using Form 13909 (Information Referral). You can also contact your state labor department or attorney general's office. Reporting does not may provide immediate action, but it creates a record and may trigger an audit.

To protect yourself, review your pay stub each payday and confirm that withholdings are being taken out. If they suddenly stop, ask your employer why. If you leave a job and suspect unpaid withholdings, request a copy of your final pay stub and keep it for your records.

Self-employed payroll taxes

If you are self-employed — a freelancer, contractor, or business owner — no employer withholds taxes for you. You are responsible for paying self-employment tax (Social Security and Medicare) and estimated federal income tax on your own.

Self-employment tax is 15.3% of your net business income: 12.4% for Social Security (on income up to a cap set each year) and 2.9% for Medicare (no cap). You pay this in addition to federal income tax. Most self-employed people make quarterly estimated tax payments to the IRS on April 15, June 15, September 15, and January 15. You can calculate these using Form 1040-ES (Estimated Tax for Individuals).

Alternatively, you can wait and pay the full amount when you file your tax return in April, but the IRS charges penalties and interest if you underpay by more than $1,000. Many self-employed people set aside 25% to 30% of their income each month to cover taxes, then adjust when they file their return.

State and local payroll taxes

Most states with income tax use the same withholding system as the federal government. You fill out a state W-4 (the form name and format vary by state) when you start a job, and your employer withholds state income tax from each paycheck on the same schedule as federal withholding.

Nine states have no income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only dividends and interest, not wages). If you work in one of these states, no state income tax is withheld.

Some cities — notably New York City, Philadelphia, and Washington, D.C. — also tax wages. Your employer withholds these local taxes separately and sends them to the city or local tax authority. The withholding works the same way as state tax: you provide information on a form, your employer calculates and withholds, and they deposit it on a set schedule.

Reading your pay stub

Your pay stub shows exactly what was withheld from your paycheck. Look for these line items: gross pay (your total earnings before deductions), federal income tax withheld, Social Security tax withheld, Medicare tax withheld, and any state or local taxes. Your net pay is what remains after all withholdings.

If the withholdings look wrong — for example, if federal tax suddenly drops to zero or jumps dramatically — ask your employer or payroll department why. It usually means someone changed your W-4, but it could also signal a payroll error. Catching mistakes early makes them easier to fix.

Keep your pay stubs. At the end of the year, your employer sends you a W-2 form that summarizes your gross pay and all withholdings for the year. The W-2 should match the total of all your pay stubs. If it does not, contact your employer to correct it before you file your tax return.

Frequently Asked Questions

Can I change how much tax is withheld from my paycheck?

Yes. Fill out a new W-4 form and give it to your payroll department or HR. The change takes effect on your next paycheck. You can adjust your withholding as many times as you need during the year — for example, if you get a second job or your spouse loses income.

What if too much tax is being withheld?

You can claim more allowances or dependents on your W-4 to reduce withholding, or you can claim exempt status if you expect to owe no tax that year. However, claiming exempt incorrectly can result in penalties. Use the IRS withholding calculator on irs.gov to determine the right W-4 entries for your situation.

Do I have to pay payroll taxes if I work under the table?

Yes. Income is taxable whether or not your employer reports it. The IRS can pursue you for unpaid taxes on unreported income, plus penalties and interest. If you are paid in cash and no taxes are withheld, you are responsible for paying them yourself when you file your return.

What if my employer says they will not withhold taxes?

Your employer is required by law to withhold taxes. If they refuse, report it to the IRS using Form 13909 or contact your state labor department. You can also consult a tax professional or employment attorney about your options.

How do I know if the right amount of tax was withheld?

When you file your tax return, you will see whether you owe money or get a refund. If you consistently owe a large amount or get a large refund, adjust your W-4. A refund means too much was withheld; owing means too little was withheld. Aim for a small refund or to owe less than $1,000.