When calculating payroll taxes, which type of income tax is typically withheld from employees?

In payroll accounting, when calculating payroll taxes, federal income tax is typically withheld from employees' earnings. This tax is mandated by the Internal Revenue Service (IRS) and applies to all employees who meet certain income thresholds. Employers are responsible for accurately withholding this tax from each paycheck based on an employee's earnings and the information they provide on their W-4 form, which includes filing status and number of allowances claimed.

Withholding federal income tax helps ensure that employees meet their tax obligations throughout the year, preventing them from facing a potentially large tax bill when they file their annual tax returns. This system benefits both the government, which collects revenue throughout the year, and employees, who can avoid a lump sum payment at tax time.

While state income tax, local city tax, and Social Security tax are also important components of payroll, the particular focus of this question is on the federal income tax as a standard withholding requirement.