{"id":4746,"date":"2024-08-30T03:36:58","date_gmt":"2024-08-30T09:36:58","guid":{"rendered":"https:\/\/web.blockadvisors.com\/?p=4746"},"modified":"2025-02-17T16:05:14","modified_gmt":"2025-02-17T22:05:14","slug":"payroll-deductions","status":"publish","type":"post","link":"https:\/\/www.blockadvisors.com\/resource-center\/small-business-services\/payroll-deductions\/","title":{"rendered":"A small business owner\u2019s guide to understanding payroll deductions"},"content":{"rendered":"
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Small business owners who add employees will also gain additional financial tasks \u2014 including taking care of payroll deductions. What counts as a payroll deduction can vary from employer to employer, but essentially, payroll deductions cover the money taken from your or your employees\u2019 paychecks for a variety of reasons.<\/p>\n\n\n\n

There\u2019s a lot to get right where payroll deductions are concerned, especially because of the Internal Revenue Service (IRS) tax rules involved. Thankfully, you don\u2019t have to tackle this task alone.<\/p>\n\n\n\n

This guide will walk you through what small businesses need to know about pre-tax deductions and post-tax deductions and which ones count as payroll tax deductions.<\/p>\n\n\n\n

Keep in mind: payroll can be time-consuming, but help is available. Whether you need to fully outsource payroll, or just need help with certain tasks, Block Advisors payroll services<\/a> are here to help you get back to the business you love.<\/p>\n\n\n\n

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Payroll services made simple<\/h3>

Cross paychecks off your small business to-do list <\/p>

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Learn more<\/a><\/div>\n<\/div><\/div><\/div>\n\n\n\n

What is a payroll deduction plan?<\/h2>\n\n\n\n

Before we dive into pre-tax vs post-tax deductions, what exactly is a payroll deduction, and what are some examples of payroll deductions? A payroll deduction plan refers to when an employer withholds money from employee paychecks. This is done for a variety of purposes, but most commonly to take advantage of employee benefits.<\/p>\n\n\n\n

A payroll deduction plan can include voluntary deductions and involuntary, or mandatory, deductions. We’ll cover the different types of deductions in more detail below, but common examples of mandatory deductions are 1) when the law requires an employer to withhold money for federal, state, and local income tax and for Social Security and Medicare and 2) wage garnishments. Like it sounds, voluntary payroll deductions are ones that employees give permission for an employer to withhold. Commonly, these are withheld for a retirement savings plan, healthcare, or life insurance premiums.<\/p>\n\n\n\n

Pre-tax deductions<\/h2>\n\n\n\n

Pre-tax deductions are amounts taken from an employee\u2019s pay before taxes are withheld. Taking deductions before taxes lowers an employee\u2019s taxable income, which can save them money come Tax Day. For example, if an employee\u2019s gross pay is $600 a week and they have $100 in pre-tax deductions, they would only pay income tax on $500 per week.<\/p>\n\n\n\n

Pre-tax deductions tend to be related to tax-advantaged employee benefits programs.<\/p>\n\n\n\n

Common examples include:<\/p>\n\n\n\n