Salary Deduction

Meaning & Definition

What is Salary Deduction

A payroll deduction is a specific amount of money subtracted from an employee's gross pay before the net pay is calculated. These deductions include various withholdings, such as taxes, insurance premiums, retirement contributions, and other authorized expenses. Payroll deductions ensure that the necessary amounts are set aside before employees receive their take-home pay. This process aids in meeting financial obligations like taxes and contributions, providing employees with accurate and transparent compensations.