Rock the 2025 FPC Exam – Master Payroll Fundamentals with Confidence!

The purpose of payroll taxes primarily revolves around funding employee retirement benefits, among other crucial social programs. Payroll taxes are typically collected from employees' wages and are used to finance various government programs, most notably Social Security and Medicare. These systems are designed to provide financial support and healthcare coverage for retirees and eligible workers.

When payroll taxes are deducted from employees' paychecks, they contribute directly to these government programs, ensuring that funds are available for workers when they retire or when they need medical assistance. This aligns with the social safety net that many countries establish to support individuals in their later years or during times of need.

The other options do not accurately reflect the primary function of payroll taxes. Bonuses, payroll processing costs, and company-sponsored events are generally funded through different mechanisms, such as company profits or operational budgets, rather than through payroll taxes. Therefore, the best description of the purpose of payroll taxes is indeed to fund employee retirement benefits and related social services.