Payroll taxes are taxes imposed on employers or employees. They are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the employer, but almost all economists agree that the true economic incidence of a payroll tax is unaffected by this distinction, and falls largely or entirely on workers in the form of lower wages. Because payroll taxes fall exclusively on wages and not on returns to financial or physical investments, payroll taxes may contribute to underinvestment in human capital, such as higher education.
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Payroll tax in the context of Taxation
A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax compliance refers to policy actions and individual behavior aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation occurred in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes and may be paid in money or as labor equivalent.
All countries have a tax system in place to pay for public, common societal, or agreed national needs and for the functions of government. Some countries levy a flat percentage rate of taxation on personal annual income, but most scale taxes are progressive based on brackets of yearly income amounts. Most countries charge a tax on an individual's income and corporate income. Countries or sub-units often also impose wealth taxes, inheritance taxes, gift taxes, property taxes, sales taxes, use taxes, environmental taxes, payroll taxes, duties, or tariffs. It is also possible to levy a tax on tax, as with a gross receipts tax.
Payroll tax in the context of Health insurance
Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among many individuals. By estimating the overall risk of health risk and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization, such as a government agency, private business, or not-for-profit entity.
According to the Health Insurance Association of America, health insurance is defined as "coverage that provides for the payments of benefits as a result of sickness or injury. It includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment".
Payroll tax in the context of Internal Revenue Code
The Internal Revenue Code of 1986 (IRC), is the domestic portion of federal statutory tax law in the United States. It is codified in statute as Title 26 of the United States Code. The IRC is organized topically into subtitles and sections, covering federal income tax in the United States, payroll taxes, estate taxes, gift taxes, and excise taxes; as well as procedure and administration. The Code's implementing federal agency is the Internal Revenue Service.
Payroll tax in the context of TriMet
The Tri-County Metropolitan Transportation District of Oregon, branded as TriMet, is a transit agency that serves most of the Oregon part of the Portland metropolitan area. Created in 1969 by the Oregon legislature, the district replaced five private bus companies that operated in the three counties: Multnomah, Washington, and Clackamas. TriMet began operating a light rail system, MAX, in 1986, which has since been expanded to five lines that now cover 59.7 miles (96.1 km). It also operates the WES Commuter Rail line since 2009. It also provides the operators and maintenance personnel for the city of Portland-owned Portland Streetcar system. In 2024, the system had a ridership of 66,876,200, or about 202,800 per weekday as of the third quarter of 2025.
In addition to rail lines, TriMet provides the region's bus system, as well as LIFT paratransit service. There are over 650 buses on 79 lines as of September 2025. In 2018, the entire system averaged 310,000 rides per weekday and operates buses and trains between the hours of approximately 5 a.m. and 2 a.m. TriMet's annual budget for FY 2018 is $525.8 million, with 30% of resources coming from a district-wide payroll tax and 10% from fares. The district is overseen by a seven-person board of directors appointed by the state's governor. As of 2022, the agency has around 3,428 employees.