Payroll Withholding Definition

Term Definition
Payroll withholding is the dollar amount employers are required to withhold from their employees’ gross pay.

Extended Definition
Employers are required by the United States and some state tax systems to hold back, or withhold, tax from employees’ gross pay. Included in this amount can be social security tax, federal tax, court-ordered payments, state income tax, and other employee authorized amounts. These withheld funds are referred to as payroll withholding.

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