What are the most common payroll deductions?

Payroll deductions are payments withheld from an employee’s paycheck by the employer. Common deductions may include:

  • Federal and state taxes
  • Insurance premiums
  • Retirement contributions
  • Child support or alimony payments

While most deductions are voluntary—health insurance premiums, 401(k) contributions—two kinds of deductions are mandatory: taxes and wage garnishments. Wage garnishments are court-ordered deductions that satisfy a debt or legal obligation, like child support or defaulted student loans.

Employers who fail to accurately withhold the mandatory deductions can be held liable for the missing amounts. To avoid accidentally failing to withhold the proper amounts, or to file payments with the authorities on time, many companies choose to work with a payroll service provider, which can help employers automate deductions and reduce errors.

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