Payroll taxes and income taxes are often confused and used interchangeably without a clear understanding of what they really mean. Payroll taxes are paid by both employers and employees, and these funds are allocated for Social Security and Medicare. Income taxes are paid only by employees and include taxes due to the federal, state, and local governments. (Unemployment taxes, paid only by employers, are a separate tax.)
Gusto makes processing both payroll taxes and income taxes simple and easy. Fixed rates are set up within the system, so the funds are automatically withheld from employee paychecks during each pay run.
