What are Payroll Deductions?

• Payroll deductions are mandatory federal or state deductions from an employee's income, or voluntary deductions authorized by the employees. These mandatory deductions include payroll, state and sales, state income, federal income and FICA taxes.
  
  

Payroll taxes

• Federal and state law requires employers to deduct from the employees income, payroll taxes such as federal income taxes, social security, Medicare and state income tax or municipal income taxes where applicable. The self-employed are required to file these taxes by April 15th, annually.
  
  

Federal Income taxes

• Federal income taxes are mandatory deductions from employee's salaries and wages. These are paid over to the federal government to assist with expenditures such as building roads.
  
  

Federal Insurance Contributions Act (FICA)

• FICA requires employers to pay 15.3 percent to the federal government, shared equally (7.65%) between employer and employee. These contributions are paid over for social security (retirement income) and Medicare (health insurance). Self-employed persons pay 15.3 percent.
  
  

Voluntary Deductions

• These deductions, authorized by the employee, include deferred compensation plans, tax deferred annuities, dependent care and flexible spending.