Payroll Glossary — 44 Terms

Use this source-reviewed glossary to understand common earnings, withholding, deduction, benefit, payroll, tax-form, and compliance labels. Employer-specific codes still require confirmation from the verified payroll contact.

How to use a payroll definition

1. Read the plain-language definition and its stated limits.
2. Check the source date when the term depends on a current threshold or rate.
3. Compare the definition with the genuine record and applicable jurisdiction.
4. Ask payroll or a qualified adviser when the code remains unclear.

Browse 44 reviewed terms

• FICA — Federal Insurance Contributions Act — the Social Security and Medicare taxes associated with covered wages.
• Social Security Tax — The employee OASDI rate is generally 6.2% of covered wages up to an annual wage base.
• Medicare Tax — The employee Medicare rate is generally 1.45% of covered wages, without the Social Security wage cap.
• Federal Income Tax Withholding (FIT) — Federal income tax withheld from wages using current IRS methods and the employee’s Form W-4 information.
• State Income Tax (SIT) — State-level income-tax withholding, where applicable, based on the relevant state rules and employee elections.
• Local Income Tax — Income or wage tax imposed by some cities, counties, school districts, or other local jurisdictions.
• Self-Employment Tax (SE Tax) — Social Security and Medicare tax generally calculated on net earnings from self-employment.
• Additional Medicare Tax — An additional 0.9% employee tax above the filing-status threshold that applies to the taxpayer.
• Gross Pay — Earnings before the taxes and deductions shown in a payroll calculation.
• Net Pay (Take-Home Pay) — The amount remaining after the deductions shown on a pay statement.
• Hourly Rate — The base amount earned for an hour of work; applicable minimum rates depend on the jurisdiction and job.
• Overtime Pay (OT) — Covered nonexempt employees generally receive at least 1.5 times the regular rate after 40 hours in a workweek.
• Salary — Compensation stated as a fixed amount for a recurring period, subject to the employment agreement and wage laws.
• Year-to-Date (YTD) — Running total of an earnings or deduction item from the start of the employer's payroll year through the current pay period.
• Commission — Variable compensation calculated under an employment or contractor agreement.
• Bonus — Supplemental wages that may use a separate federal withholding method; withholding is not the final tax rate.
• 401(k) Contribution — Payroll contributions to an employer-sponsored retirement plan; traditional and Roth tax treatment differ.
• Health Insurance Premium — The employee-paid portion of health coverage, which may be deducted before or after tax depending on the plan.
• Health Savings Account (HSA) — A tax-advantaged account available to an eligible individual under the HSA rules.
• Flexible Spending Account (FSA) — An employer plan that can reimburse eligible health or dependent-care expenses under plan and tax rules.
• Wage Garnishment — A legal process requiring part of a person’s earnings to be withheld for a debt or obligation.
• Pay Period — The work interval included in a payroll calculation.
• Pay Date (Check Date) — The date associated with the wage payment, which differs from the pay-period dates.
• Direct Deposit — Electronic transfer of a wage payment to an account designated through an authorized process.
• Exempt Employee — An employee excluded from particular FLSA minimum-wage or overtime protections only when the applicable exemption tests are met.
• Non-Exempt Employee — An employee covered by applicable minimum-wage and overtime protections.
• Form W-4 — The IRS Employee’s Withholding Certificate used for federal income-tax withholding.
• Form W-2 — An annual wage and tax information return furnished to the employee and filed under federal rules.
• Form 1099-NEC — An information return used for qualifying nonemployee-compensation payments made in a trade or business.
• Form I-9 — USCIS employment-eligibility verification form completed under specific employee and employer timing rules.
• Employer Match — An employer retirement-plan contribution calculated under the plan’s matching formula.
• Paid Time Off (PTO) — Paid leave tracked under an employer policy, agreement, or applicable law.
• COBRA — Federal continuation-coverage rules that can temporarily extend qualifying group health coverage.
• Fair Labor Standards Act (FLSA) — Federal law covering minimum wage, overtime, recordkeeping, and youth-employment standards for covered work.
• Minimum Wage — The lowest wage required by the applicable federal, state, or local rule for a covered worker.
• Employer Identification Number (EIN) — A nine-digit federal tax identifier the IRS assigns to an entity when one is required or requested.
• State Disability Insurance (SDI) — A payroll label that may refer to a jurisdiction-specific disability-insurance contribution.
• State Unemployment Tax or Contribution (SUTA/SUI) — A state unemployment-program contribution whose payer, rate, and wage base depend on current state law.
• Federal Unemployment Tax (FUTA) — A federal unemployment tax generally paid by the employer on a limited wage base.
• Pre-Tax Deduction — A payroll deduction excluded from one or more tax bases under a specific rule.
• After-Tax (Post-Tax) Deduction — A payroll deduction that does not reduce the applicable current taxable-wage base.
• Imputed Income — Taxable value assigned to a noncash or fringe benefit under applicable rules.
• Per Diem — A daily travel allowance whose tax treatment depends on the accountable-plan and substantiation rules.
• Shift Differential — Additional compensation paid under an employer policy or agreement for specified shifts or hours.