What Are Payroll Deductions and How Do They Work?

[Ethan Walker]

Payroll deductions usually refer to money an employer can deduct from an employee's salary before or after it's paid. It depends on the employee's circumstances and the payroll laws of the area or country where the employee and employer operate. Some deductions, for example, are done before the tax calculation, whereas others are only made if a certain level of income is already reached in the taxation. The final paycheck an employee gets might be different from what they expected to receive based on the payroll deductions made. It is, because of this, important that the employee knows that gross pay is the money they are paid by the employer before any pay deductions and that this is usually not the same as the net income, which is the money they finally take home.