Calculating payroll tax is the process of figuring out how much money an organization should withhold from its employee’s paychecks in order to meet its tax obligations. This includes deductions for income taxes, Social Security and Medicare, as well as applicable state and local taxes. It’s important for employers to be aware of their responsibilities when it comes to withholding payroll taxes from employees’ wages – not only is it the law, but it also has serious financial implications for any business that fails to comply. Taking the time to accurately calculate payroll taxes can save organizations from facing government penalties and other issues down the road.