Glossary definition

What is withholding?


Withholding refers to the percentage of an employee’s earnings which are automatically withheld, meaning they are taken from their paycheck and paid directly into state or federally mandated tax collections. The most common mandatory tax withheld is FICA, a combination of Medicare and Social Security Tax. The Internal Revenue Service, or IRS, define withhold practices in the United States – all legally employed individuals working in the United States are subject to withholding taxes.

A more general withhold definition is simply the suppression of a thing, tangible or intangible, from an individual or entity.