Deduction

Payroll deductions reduce gross pay to produce net pay — falling into three categories: mandatory deductions required by law (federal, state, and local income tax; Social Security and Medicare; wage garnishments ordered by courts), voluntary pre-tax deductions that reduce taxable income (401(k) contributions, health insurance premiums, FSA contributions), and voluntary post-tax deductions that do not affect taxable income (Roth 401(k), union dues, charitable giving programs). The practical compliance risk is the sequence and priority of deductions when multiple obligations exist: wage garnishment law in the United States sets a maximum garnishment percentage and defines a priority order when multiple garnishments compete, and employers who garnish incorrectly — taking too much, too little, or in the wrong sequence — face liability from both the employee and the issuing court.