Question

What is a difference between payroll and income taxes?
a. Payroll taxes are itemized deductions from an individual’s paycheck, while income taxes are based on an individual’s salary.
b. Payroll taxes are taken out of an individual’s salary once a year, while income taxes are paid by workers every time they get paid.
c. Payroll taxes are based on an individual’s salary, while income taxes are itemized deductions from an individual’s paycheck.
d. Payroll taxes are paid by individuals who have a job, while income taxes are partially funded by employers and employees.

Answer 1

In my view the main difference between payroll and income taxes is a. Payroll taxes are itemized deductions from an individual’s paycheck, while income taxes are based on an individual’s salary. But I could be wrong as I'm confused by statements given above and can't choose the one that is the only right.

Answer 2

Payroll taxes are regarded as the taxes based on an individual's salary; whereas, the income taxes are itemized deductions from an individual's paycheck.

What is income tax?

The taxes which are generally paid over the income earned by an individual during the previous financial year are known as income tax.

Payroll taxes, on the other hand, are always based on the salaries claimed by an individual throughout the year. They are determined annually and employer does not contribute to the same.

Hence, option C holds true regarding income tax.

Learn more about income tax here:

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