Which taxes are considered mandatory payroll deductions?

Mandatory payroll deductions include federal income tax, Social Security and Medicare taxes, and, depending on the employee’s location, state and local income taxes. In some cases, they may also include court-ordered wage garnishments, such as child support or tax levies.

How do mandatory deductions differ by country or state?

In the U.S., all employees pay federal taxes like Social Security and Medicare, but state and local income taxes vary. Some states have no income tax, while others use flat or progressive rates. In other countries, mandatory deductions may include contributions to national healthcare, pensions, or unemployment insurance, each with its own rules and rates.

What happens if mandatory deductions are not properly withheld?

If an employer fails to withhold mandatory deductions, they may face penalties, back taxes, interest charges, or legal action. Employers are legally responsible for ensuring accurate and compliant payroll withholding.