Payroll Deduction

The deductions made by an employer from an employee's paycheck prior to direct deposit, usually to pay for elected benefits.

More Details

Payroll deduction is a method of deducting money from an employee's paycheck for various purposes, such as taxes, insurance premiums, and retirement contributions. Payroll deductions are typically made at the time of payment and are taken out of an employee's gross pay before taxes are calculated.

Example

Imagine that you are an employee and your employer offers a retirement plan with payroll deductions. You might decide to contribute a certain percentage of your paycheck to the retirement plan, and this contribution would be deducted from your gross pay before taxes are calculated.

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