Employment tax is a collective term for taxes that businesses and/or its employees pay to a federal or local agency. While list of employment taxes varies per state or country, there are a few which are common for many. Federal income tax come from employee wages and goes to the federal government and is used to fund government programs. There is also the workers’ compensation fees which pays for the insurance of employees in instances of injury or accident. Meanwhile, the Social Security tax is the tax from both employers and employees to finance the Social Security program. Other types of employment tax include self-employment tax and state income tax.

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