How are payroll taxes typically calculated?

Payroll taxes are calculated primarily based on employee wages along with established rates for Social Security and Medicare. When employers process payroll, they take a percentage of each employee's wages to contribute to these federal programs. The Social Security tax rate is capped on wages up to a certain limit, while Medicare taxes are applied to all wages without a cap. This calculation ensures that funding for these essential programs is sustained through contributions tied directly to workers' earnings.

The other options, such as company profits or total revenue, are not directly related to payroll tax calculations since payroll taxes focus specifically on the compensation paid to employees rather than the overall financial performance of the company or its employee count.