The employer and employee split payroll taxes, but the employer withholds and sends all of it

Payroll taxes are split between you and your employer, but the split is not equal and the payment route is not what most people expect. Your employer withholds your half from your paycheck, then sends both halves to the IRS — yours and theirs — together. You never write a check for payroll taxes yourself. Your employer does, even though part of the money came from your wages.

This matters because it changes what you owe, what you see on your paystub, and what happens if your employer fails to send the money in. Understanding who actually pays what helps you read your paystub correctly and know what to do if something goes wrong.

Key Takeaways

  • Social Security and Medicare taxes are split 50-50 between you and your employer — each pays 6.2% for Social Security and 1.45% for Medicare on your wages.
  • Your employer withholds your half from your paycheck before you receive it, so you never see that money.
  • Your employer sends both halves to the IRS together, making the employer responsible for the full payment even though half came from your wages.
  • Self-employed people pay both halves themselves — 12.4% for Social Security and 2.9% for Medicare — because they are both employer and employee.
  • If your employer does not send the withheld taxes to the IRS, you can still owe the IRS even though the money was already taken from your pay.

How the employer-employee split works on Social Security and Medicare

Social Security and Medicare taxes are the two main payroll taxes, and they are split evenly. For Social Security, you pay 6.2% of your wages and your employer pays 6.2%. For Medicare, you pay 1.45% and your employer pays 1.45%. These percentages are the same for all employees and do not change based on income, except that Medicare has an additional 0.9% tax on wages over a certain threshold — that extra 0.9% comes entirely from the employee.

The split is built into how your paystub is calculated. If you earn $1,000 in a week, your employer withholds $62 for Social Security and $14.50 for Medicare from your paycheck. You take home $923.50 less (before income tax and any other deductions). Your employer then sends the IRS $124 for Social Security (your $62 plus their $62) and $29 for Medicare (your $14.50 plus their $14.50). The employer's own tax liability for that employee is $76.50 per week.

Why your employer sends all the money, even the part that came from you

Your employer is responsible for depositing all payroll taxes — both the employee and employer portions — with the IRS on a set schedule. The schedule depends on how much tax the business owes. Most employers deposit weekly or biweekly. Some larger employers deposit daily. The IRS tells each employer which schedule applies to them.

This arrangement exists because the IRS wants one entity responsible for getting the money in on time, rather than tracking millions of individual employee payments. It also means your employer has a legal duty to withhold your share and send it, even if the business is struggling financially. If an employer fails to send withheld taxes, the IRS can pursue the employer for the full amount, plus penalties and interest.

What happens if your employer does not send the money to the IRS

If your employer withholds payroll taxes from your paycheck but does not send them to the IRS, you still owe the IRS. The money was already deducted from your wages, but the IRS did not receive it. This creates a serious problem: you have already lost the money from your paycheck, and the IRS will still expect payment.

If you discover this has happened, contact the IRS directly. You can report it using Form 13909, which reports suspected tax fraud or evasion. The IRS will investigate whether the employer failed to deposit. If the IRS collects from the employer later, you may not owe again, but you should not assume this will happen. You may need to pay the IRS yourself to protect your own tax record, then pursue the employer for reimbursement through small claims court or a lawyer.

How self-employed people pay both halves

If you are self-employed, you are both the employer and the employee, so you pay both halves of Social Security and Medicare taxes yourself. This is called self-employment tax. You pay 12.4% for Social Security (6.2% employee + 6.2% employer) and 2.9% for Medicare (1.45% + 1.45%), plus the additional 0.9% Medicare tax if your net self-employment income is high enough.

Self-employed people calculate self-employment tax on Schedule SE and report it on their tax return. You do not withhold from yourself during the year — instead, you may need to make quarterly estimated tax payments to the IRS to avoid a penalty. The self-employment tax is in addition to regular income tax, which is why self-employed people often owe more total tax than employees with the same income.

Federal income tax withholding is separate from payroll taxes

Payroll taxes (Social Security and Medicare) are different from federal income tax withholding. Your employer withholds federal income tax based on the W-4 form you fill out, and the amount depends on your filing status, number of dependents, and other factors you choose. The employer sends federal income tax withholding to the IRS separately from payroll taxes.

Payroll taxes are fixed percentages that do not change based on your personal situation. Federal income tax withholding varies. Both come out of your paycheck, but they are calculated and reported differently. On your paystub, you will see them listed as separate line items.

State and local payroll taxes follow the same split

Some states and cities also have payroll taxes. These follow the same pattern as federal payroll taxes: the employer withholds the employee portion from the paycheck and sends both portions to the state or local tax authority. The percentages and rules vary by location. Some states have no payroll tax at all. A few states require employees to contribute to disability insurance or family leave programs, which work the same way — the employer withholds and sends.

If you work in a state or city with payroll taxes, your paystub will show those withholdings separately from federal taxes. Your employer is responsible for knowing the rules in every state and locality where you work and withholding correctly.

Frequently Asked Questions

Can I opt out of paying payroll taxes?

No. Payroll taxes are mandatory for all employees and self-employed people. The only exceptions are certain religious groups that have received IRS approval to be exempt, and some government employees in specific situations. If you are a regular employee, you cannot opt out.

What if my employer withholds the wrong amount?

If too much is withheld, you will get a refund when you file your tax return. If too little is withheld, you will owe when you file. Payroll tax withholding is calculated using IRS tables, so errors usually happen when you do not update your W-4 after a major life change, or when you have multiple jobs. You can adjust your withholding by submitting a new W-4 to your employer at any time.

Do I pay payroll taxes on tips?

Yes. Tips are considered wages for payroll tax purposes. Your employer should withhold Social Security and Medicare taxes on tips you report. If you receive cash tips you did not report to your employer, you still owe self-employment tax on them when you file your return.

What if I work for multiple employers?

Each employer withholds Social Security and Medicare taxes separately. If your combined wages exceed the Social Security wage base (which changes each year), you may overpay Social Security tax. You can claim a credit for the overpayment on your tax return. Medicare tax has no wage base limit, so you pay it on all wages.

Do I pay payroll taxes on bonuses and commissions?

Yes. Bonuses, commissions, and any other compensation are treated as wages for payroll tax purposes. Your employer withholds Social Security and Medicare taxes on these payments just as they do on regular salary.