APA Certified Payroll Professional (CPP) Practice Exam 2026 - Free CPP Practice Questions and Study Guide

Social Security Tax is a payroll tax that is shared between the employer and the employee. Both parties contribute a specific percentage of the employee's earnings to the Social Security program, which is designed to provide retirement benefits, disability income, and other benefits to eligible individuals. The distinct feature of Social Security Tax is that it has matching contributions, meaning that for every dollar an employee contributes, the employer contributes an equal amount. This shared responsibility underscores the social contract in providing financial support to individuals in need, through various benefits funded by these taxes.

On the other hand, Federal Income Tax and State Income Tax are typically withheld from an employee's paycheck solely by the employer, who then remits these taxes to the respective governments. Unemployment Tax is also primarily an employer obligation, as employers are the ones required to pay this tax to fund unemployment benefits for laid-off workers. Therefore, the defining characteristic of Social Security Tax as a shared contribution makes it the correct answer in this context.